Advances in Engineering Software 40 (2009) 11681178

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Advances in Engineering Software

journal homepage: www.elsevier.com/locate/advengsoft

Developing a practical framework for ERP readiness assessment using fuzzy

analytic network process
Jafar Razmi *, Mohamad Sadegh Sangari, Reza Ghodsi
Department of Industrial Engineering, College of Engineering, University of Tehran, P.O. Box 11155-45632, Tehran, Iran

a r t i c l e

i n f o

Article history:
Received 25 September 2008
Received in revised form 3 March 2009
Accepted 11 May 2009
Available online 7 June 2009
Keywords:
Enterprise resource planning (ERP)
Critical success factors (CSF)
Readiness assessment
Fuzzy analytic network process

a b s t r a c t
Previous studies report unusually high failure in enterprise resource planning (ERP) projects. Thus, it is
necessary to perform an assessment at the initial stage of an ERP implementation program to identify
weaknesses or problems which may lead to project failure. No denite practical solution could be found
for these kinds of problems in the literature. In this paper, a new look at the determinants of a rms readiness to implement an ERP project is presented and using fuzzy analytic network process a practical
framework is developed. The rms current conditions regarding ERP project can be determined and necessary changes prior to implementation of ERP system can be specied. The readiness for ERP implementation is decomposed into project management, organizational, and change management areas and the
assessment factors are identied after comprehensive study of critical success factors on ERP implementation. The proposed framework is applied to a real case and the advantages are illustrated.
2009 Elsevier Ltd. All rights reserved.

1. Introduction
In todays dynamic and unpredictable business environment,
companies face the tremendous challenge of expanding markets
and rising customer expectations. This necessitates to lower total
costs in the entire supply chain, shorten throughput times, reduce
inventories, expand product choice, provide more reliable delivery
dates and better customer service, improve quality, and coordinate
global demand with supply and production more efciently [1,2].
In order to accomplish these objectives, more and more companies
are turning to the enterprise resource planning (ERP) systems [3].
ERP systems are integrated and corporate-wide systems that
automate core activities such as manufacturing, human resources,
nance and supply chain management. In such systems the fragmented information is integrated to support the decision-making
process. By using this system companies can achieve many benets
such as easier access to reliable information in a timely manner,
elimination of redundant operations or data, reduction of cycle
times, reduction of inventory levels, automation or speeding up
of business processes, improvement in supply chain management,
improvement in quality and competitiveness, higher efciency and
hence lower costs [48].
Every ERP project includes multiple stages and each stage consists of several diverse activities. The most general categorization
for these stages consists of following three phases [10]:
* Corresponding author. Tel.: +98 021 88021067; fax: +98 021 88013102.
E-mail addresses: jrazmi@ut.ac.ir (J. Razmi), mssangari@gmail.com (M.S.
Sangari), ghodsi@ut.ac.ir (R. Ghodsi).
0965-9978/$ - see front matter 2009 Elsevier Ltd. All rights reserved.
doi:10.1016/j.advengsoft.2009.05.002

(1) Pre-implementation (or setting-up).

(2) Implementation.
(3) Post-implementation (or evaluation).
The above categorization has also been used to study the critical
success factors of ERP projects [13].
The ERP market has been and continues to be one of the fastest
growing segments of the information technology (IT) industry. In
recent years, many companies around the world have implemented ERP systems and the number of companies that plan to
implement ERP is growing rapidly [9]. According to a study by
[7] more than 70% of Fortune 1000 companies have either begun
the implementation of an ERP system or plan to do so in the next
few years. However, given the signicant investment in resources
and time, many companies did not achieve success in ERP implementation. Researchers have identied that many organizations
have experienced enormous challenges in the course of implementation and some suffered from disastrous ERP projects [11,12,14]. It
is indicated that while the ERP failure rate may be even more than
50%, about 20% of attempted ERP adoptions are turned to be complete failures [18,19]. The success rate in implementing ERP is below 30% [61] and according to The Gartner Group, 70% of all ERP
projects fail to be fully implemented [17]. A survey conducted in
2001, has shown that only 51% of American rms perceived their
ERP implementation as unsuccessful [15]. It estimated that the
ERP success rate in China is approximately 10% [16].
Therefore, many experts and researchers have investigated this
issue from various viewpoints. Some provide valuable insights into
the process of ERP implementation and others identify a variety of

J. Razmi et al. / Advances in Engineering Software 40 (2009) 11681178

factors critical to the success of an ERP project. In this paper, presenting a novel approach, ERP readiness is introduced as a new
concept and a practical framework using fuzzy analytic network
process is constructed for its assessment. The result of this assessment determines the current state of organizations readiness to
implement an ERP system and furthermore it identies the areas
which must be improved prior to implementation stage.
The paper is organized as follows: rst, ERP readiness concept is
introduced. Next, fuzzy analytic network process is described and
then applied to construct an assessment framework. A conceptual
model describing an ERP initiative is also introduced and the readiness for ERP implementation is decomposed into three main areas.
The critical success factors for ERP system are also studied to identify the assessment factors. The application of the assessment
framework using a real case and the obtained results are discussed
at the latter part.

2. Research method
In this research, a practical framework is developed using fuzzy
analytic network process to determine the level of a rms readiness to implement an ERP system. The methodology comprises of
many steps. Every ERP project is considered as a multi-stage process and readiness assessment is the rst stage. Hence, a conceptual model is proposed to better explain different dimensions of
the ERP project. From this model, main areas of the assessment
are determined. Then, critical success factors for ERP implementation are evaluated and the assessment factors are determined. The
factors are grouped and the assessment framework is constructed.
The algorithm of fuzzy analytic network process is then used for
this framework. The benets of the proposed framework are illustrated by results obtained from the real case study.

1169

readiness for ERP implementation. Thus, potential risks of the project can be reduced and many implementation difculties can be
avoided.
After weaknesses are identied, to rectify them some improvement projects must be dened and carried out. Considering these
improvement projects, better budget and time estimates needed
for the implementation of the ERP can be given. It is also possible
to predict the level of success achievable at the end of the project
on the basis of the identied level of readiness. Therefore, the benets of an ERP readiness assessment program can be summarized
as the following [20]:
(1) Determining organizational readiness for undertaking an
ERP project.
(2) Identifying areas of weakness related to an ERP initiative
within the organization.
(3) Predicting the outcome of the ERP project in terms of common project metrics (e.g. budget, schedule, system capability and etc.) with a degree of condence.
The results of this assessment will illustrate that the organization possess the fundamental elements in place to ensure that an
ERP implementation meets the established goals that have been
set for the project. The assessment involves a wide range of questions and discussions in several areas related to such an initiative.
In practice, ERP readiness assessment would enable ERP project
managers to achieve a comprehensive understanding of ERP project vulnerability and help them to strengthen areas of weakness
prior to project implementation. Therefore, they can effectively
manage the costs and risks associated with the project and avoid
most of the challenges in the implementation stage. The main
objective of this paper is to develop a framework including the
associated factors for ERP readiness assessment. The framework
is constructed using fuzzy analytic network process.

3. ERP readiness concept

As mentioned earlier, ERP projects suffer from high rate of failure. While some organizations undertaking such efforts report ontime schedules, intact budgets and capability of providing measurable value to the organization, these achievements are mostly the
exception rather than the rule [20]. Mismanagement, unfullled
expectations and major challenges are prevalent in the implementation of ERP systems and sometimes turn the project into a complete failure. The challenges are caused by various risk factors
which have been addressed by many researchers. These factors affect the success of ERP project in the implementation stage. A set of
these factors must be measured at the beginning of the project to
avoid potential challenges in latter stages. Considering this set of
factors, it would be denitely necessary to assess the status of a
rm prior to ERP implementation. This assessment determines
whether the rm is ready to implement an ERP program or not.
Extensive preparation before implementation is the key to success
of an ERP project and without proper readiness the project probably ends in failure. If the rms readiness is not at a satisfactory level, then more challenges will be faced during the project
implementation. A higher level of readiness enhances the likelihood of achieving success in the ERP implementation.
Therefore, ERP readiness assessment is introduced as a separate
stage for every ERP project which must be performed necessarily at
the pre-implementation phase of the project regardless of the selected software product. The assessment is actually a measurement
of the current conditions of the organization which are related to
an ERP implementation program. Not only this assessment identies a rms current capability to implement an ERP initiative, but
also identies the areas which are perceived as the organization
weaknesses and must be improved to achieve a better state of

4. Fuzzy analytic network process

Fuzzy analytic network process is applied to develop an assessment framework identifying the level of readiness of an organization for implementing an ERP program. The framework which
contains main areas of the assessment and related factors, are categorized into ve main groups which are interrelated in a network
structure. Fuzzy set theory is also applied to deal with the uncertainties in the judgments.
4.1. Analytic network process
The analytic network process (ANP), a generalization of analytic
hierarchy process (AHP), is a multi-criteria assessment tool for
decision structuring and analysis. Saaty introduced AHP as a powerful and exible decision making technique that helps decision
makers to set priorities and choose the best alternative [21]. However, it represents only a framework with a unidirectional hierarchical relationship and cannot deal with interconnections
between decision factors at the same level. Therefore, in many situations where there are interactions between decision variables,
AHP may not be considered as an effective method to implement.
ANP has been applied by many researchers to model many problems in different areas [2631]. In this paper, the technique is used
along with fuzzy set theory to develop an assessment framework
for ERP readiness.
ANP generalizes AHP by replacing hierarchies with networks
and is more powerful in modeling complex decision environments
than AHP because it can be applied to decision models involving a
variety of interactions and dependencies. It is capable of handling

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interrelationships between the decision levels and attributes by

obtaining the composite weights through the development of a
supermatrix. The supermatrix is a partitioned matrix, where each
sub-matrix is composed of a set of relationships between two components or clusters in a connected network structure [2224].
The ANP technique includes two parts: the rst part consists of
a control hierarchy or network of criteria and sub-criteria that control the feedback networks. The second part consists of the networks of inuence that contain those criteria and their clusters
formed by logical grouping. Each control criterion or sub-criterion
has a feedback network [25].



~ Mly ; Mry l m  ly; u m  uy;
M

where l(y) and r(y) denote the left side representation and the right
side representation of a fuzzy number, respectively.
The steps of the assessment algorithm are explained in following paragraphs:
Step 1: ANP framework
The ANP framework is composed of a goal, a set of factors and
related sub-factors. The components of the framework are
related to each other by different types of conjunctive arrows
(unidirectional and bilateral) based on relationship types.
Step 2: Local weights
The local weights of the factors and sub-factors are determined
by pair-wise comparisons. In this step, the factors are compared
with each other assuming that there is no dependency among
them. The general question is How important is factor/sub-factor A compared with factor/sub-factor B? and the answer is a
linguistic variable. These variables are given in Table 1 and their
membership functions are shown in Fig. 2. To calculate the local
weights, rst, the values of fuzzy synthetic extent are calculated
by the following formula:

4.2. Fuzzy ANP algorithm

Fuzzy set theory was introduced by Zadeh to manipulate information and data with non-statistical uncertainties [33]. It can
mathematically express vagueness and subjective relationships. It
also provides formalized tools to deal with the imprecision due
to unquantiable and incomplete information in many problems.
Two main characteristics of fuzzy logic which makes it benecial
for our problem are the following:
(1) It is suitable for uncertain or approximate reasoning, especially for the problems with a mathematical model that is
difcult to derive.
(2) It allows decision making with estimated values under
incomplete or uncertain information.
The fuzzy ANP algorithm for assessment of ERP readiness is
constructed in six steps using Changs extent analysis method
[34,67], a popular fuzzy AHP approach. The method is relatively
easier than other proposed approaches and has been used in several cases [6870].
Let X = {x1, x2, . . ., xn} be an object set and U = {u1, u2, . . ., um} be a
set of goals. According to the method of Changs extent analysis,
each object is taken and extent analysis for each goal is performed,
respectively. Therefore, m extent analysis values for each object
can be obtained with the following signs:
j
M 1gi ; M 2gi ; . . . ; M m
gi i 1; 2; . . . ; n; where all M gi j 1; 2; . . . ; m are
triangular fuzzy numbers. Among various membership functions,
the triangular fuzzy number is the most popular in the engineering
~ is denoted simply by
applications. The triangular fuzzy number M
(l, m, u) and shown in Fig. 1. The parameters l and u, respectively,
represent the smallest and the largest possible values and m stands
for the most promising value that describe a fuzzy event. Each triangular fuzzy number has linear representations on its left and
right side such that its membership function can be dened as
the following:

~ f0; if x < l or x > u; x  l=m  l; if l  x

lx=M
 m; u  x=u  m; if m  x  ug

y 2 0; 1

Si

m
X

Mjgi 

j1

where

"
n X
m
X
i1

hP P
n
m
i1

#1
Mjgi

j
j1 M gi

i1

for i 1; 2; . . . ; n

j1

Pn1

numbers.

u
i1 i

; Pn1
i1

mi

; P1n

l
i1 i


, as for fuzzy

Then, the degree of possibility for each convex fuzzy number Si

i = (1, 2, . . ., n) to be greater than other convex fuzzy numbers Sj
j = (1, 2, . . ., n); is determined by next formula.

VSi  S1 ; S2 ; . . . ; Sn VSi  S1 ; and Si  S2 ; and . . . and

Si  Sn  min VSi  Sj i; j 1; 2; . . . ; n; i j
Assume that S1 = (l1, m1, u1) and S2 = (l2, m2, u2), then

VS2  S1
supminlS1 x; lS2 y

1; if m2  m1 ;0; if l1  u2 ;


l1  u2
; otherwise ;
m2  u2  m1  l1

Table 1
Linguistic variables to describe relative importance.
Linguistic variables for relative importance

Triangular fuzzy scale

(1)
(2)
(3)
(4)

(0.5, 1,
(1, 1.5,
(1.5, 2,
(2, 2.5,

Equally important
Weakly more important
Strongly more important
Absolutely more important

1.5)
2)
2.5)
3)

A fuzzy number can always be given by its corresponding left

and right representation of each degree of membership (see Fig. 1):

(1)

(2)

(3)

(4)

1
1.0
Ml(y)

Mr(y)

M
0.0

~
Fig. 1. A triangular fuzzy number, M.

Relative
Importance

Fig. 2. Membership functions of linguistic variables to describe relative importance.

J. Razmi et al. / Advances in Engineering Software 40 (2009) 11681178

The non-fuzzy weight factor would be as the following:

1171

analysis of ERP implementation literature and the ANP model is

constructed.

W min VS1  Sj ; min VS2  Sj ; . . . ; min VSn  Sj

5.1. Conceptual model of an ERP initiative
The weight factor is normalized and used in the third step.
Step 3: Interdependent weights
In this step, the inner dependence matrix of each factor is
constructed regarding the other factors with fuzzy scale. The
general question is How important is the factor A when compared with factor B on controlling the other factors? and the
answer is one of the linguistic variables given in Table 1. Then,
relative importance weights of the factors are calculated and
arranged into the dependence matrix. This matrix is multiplied
by the local factor weights calculated in Step 2 to determine the
interdependent weights of the factors.
Step 4: Global weights
The global weights for the sub-factors are determined by multiplying the local sub-factor weights and the interdependent
weights of the factor to which it belongs.
Step 5: Sub-factorsThe sub-factors are measured using linguistic
variables given in Table 2. The membership functions are represented in Fig. 3.
Step 6: ERP readiness level
The readiness level of a rm for the ERP project is determined
with sum of products of the global weight of each sub-factor
obtained from Step 4 with its assigned linguistic value obtained
from Step 5.

5. The assessment framework

As stated before, the rst step of the fuzzy ANP algorithm
for ERP readiness assessment is the development of an ANP
framework. The framework is applied to perform the assessment
of ERP readiness and is composed of a goal, a set of factors and
related sub-factors which should be identied and structured
hierarchically. In this section, a conceptual model for an ERP
project is introduced to determine the main areas of the assessment. Then, the assessment factors are identied by a thorough

Table 2
Linguistic variables to measure sub-factors.
Linguistic variables for sub-factors

Fuzzy scale

(1)
(2)
(3)
(4)
(5)

(0, 0, 25)
(0, 25, 50)
(25, 50, 75)
(50, 75, 100)
(75, 100, 100)

Very low
Low
Medium
High
Very high

To have a better understanding of an ERP initiative and its characteristics, a conceptual model is introduced and shown in Fig. 4.
The model identies the main assessment areas of ERP readiness.
An organization is a combination of processes, systems, structures,
working units, job denitions and many other characteristics. The
current state of the organization is dened by these characteristics
altogether. Once the decision to implement ERP is made, some
preparations such as project goals and project scope denition,
and team formation would be necessary and must be performed
at the beginning of the project. Then, an appropriate ERP system
according to the organizational requirements and the specic criteria has to be chosen from the ERP market. Implementation of the selected ERP system is associated with a great deal of major changes
which necessitates having a consolidated change management program. The changes in most of the organizational characteristics
move the organization to a new state (the state of an organization,
which adopted an ERP system). Since an ERP program is considered
as a project including multiple stages, all of the related activities
need to be accomplished in a project management environment.
According to this model, an ERP project can be simply decomposed into four different aspects namely organization, system,
change and project. Three of these aspects constitute the main
areas of ERP readiness which are organizational readiness, project
management readiness, and change management readiness.
Therefore, the overall readiness for ERP consists of readiness in
the above three areas. These areas will also be in relation with the
assessment factors in the ANP framework.
5.2. ERP readiness factors
The factors used in the assessment are identied after a thorough study of critical success factors (CSFs) of ERP implementation.
The ERP implementation CSFs have been vastly addressed and analyzed in ERP literature by many researchers [35,38,39,42
45,47,51].
As mentioned earlier, readiness assessment should be performed at the pre-implementation phase of an ERP project to measure the overall readiness of a rm for implementing the project
and to reduce potential risks and challenges which threaten the
project success in future stages. Therefore, those CSFs which must
be attended especially in the pre-implementation phase of an ERP
project would be identied as the factors of readiness assessment.
Altogether, 15 factors were identied as the assessment factors
after a comprehensive survey on ERP implementation CSFs. Then,
these factors are classied into ve categories as project, vision
and goals, systems and processes, culture and structures, and
human resources. Each category and their dependent factors are
explained below.
5.2.1. Project

(1)

(2)

(3)

(4)

(5)

Sub-factors
50

100

Fig. 3. Membership functions of linguistic variables to measure sub-factors.

 Project championship: According to [48], the importance of project championship in an ERP implementation is greater than
other information systems implementations. The commitment
of the project champion is critical to drive consensus and oversee the entire project [47]. The project champion must be a high
level ofcial in the organization. He/she should be a real advocate of the project [44] and must continually manage resistance
and change during the implementation [51]. Project championship is also considered as a CSF for ERP implementation by
[10,38,54,55].

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J. Razmi et al. / Advances in Engineering Software 40 (2009) 11681178

Project Context

ERP system

Organization
Current state

Organization
New state
(With ERP)

Change

(Without ERP)

Fig. 4. A conceptual model of an ERP initiative.

 Resource allocation: ERP implementation demands valuable

resources from the organization such as time, money and personnel [39]. Resource requirements are critical to realize the
benets associated with an ERP package [62] and should be
determined early in the project [53]. The resources must be provided and allocated according to a resource plan which is an
important part of the project management program.
 Assign responsibilities: In an ERP project, several parties must
cooperate with each other but each accomplishes different tasks
based on their given responsibility. According to [47], it is
important to assign the responsibilities for the ERP project.
Assigning the responsibilities is one of the main parts of the project management program which is critical to the success of ERP
implementation.
 Project team: Since ERP implementation demands multiple skills,
to have a successful ERP project a number of the best organizations employees must be assigned to the project team
[35,40,46,47,44,50]. Based on many surveys, involving people
with both business and technical knowledge into the project
team is critical to achieve success [35,42,44,45,48,49]. The project team should be balanced, cooperative and cross functional.
It is also important that the people in the project team work on a
full time basis [44,56] and their performance should be fairly
compensated [2,46]. The areas where team members lack
knowledge must be identied and resolved using qualied consultants [63,64]. More information can be found in [37,38,55].
 Project scope: The scope of the ERP project must be clearly
dened [35,4345,47,49]. It should be determined whether only
a few functional units are involved in the project or the system
implementation takes place over the entire organization. For
organizations with multiple sites, it should be determined
whether the system is implemented globally or restricted to certain sites. The affected business processes are also determined in
the project scope. The project scope directly affects the implementation time and cost of the project. A project scope that is
too broad can cause severe problems [45]. It is also important
to establish realistic milestones and delivery dates for the ERP
project [4244,49,51].

5.2.2. Vision and goals

 ERP implementation vision: It is essential to have a clear vision for
the ERP system [39,55]. The vision is needed to guide the ERP
implementation [40,41] and must specify measurable goals
and targets [42,43].
 ERP mission and goals: It is very important to dene clear goals
and mission for the system [39,52]. The mission and goals must
be well understood across the organization [44,45]. The organization must carefully dene why the ERP system will be imple-

mented and what critical business needs the system will address
[10,5759] and what business values the ERP system is intended
to deliver. In addition, the benets of the system must be claried before implementation. The system goals, deliverables and
expected benets are considered along with the project risks,
costs and needed resources to justify the investments in the
ERP system. According to [46], the justication should also be
made based on the changes in work processes to align with
the future direction of the business.
5.2.3. Systems and processes
 Existing systems: Before ERP implementation stage, it is important to identify and implement the necessary changes in the
existing systems of the organization. Completeness, compatibility, usability and integrality of the current systems should be
achieved at a satisfactory level [60]. Therefore, specications
of the most suitable ERP system for the organization can be
determined more accurately at the requirements identication
stage.
 Existing processes: The above statements are also true for the
existing business processes of the organization. The processes
needing improvement should be identied and necessary
adjustments should be made prior to ERP implementation stage
[60]. This is important in designing the system architecture and
will ensure that the selected ERP system will reect the complete business processes.

5.2.4. Culture and structures

 Culture: As ERP projects are accompanied by many enterprise
wide changes, the organizational culture plays an important role
in the implementation stage. It can be a facilitator or a major
impediment to change. In addition, since an ERP system brings
a new way of working and communicating, the success and
acceptance of the system is heavily dependent on the organizational culture. The successful implementation of ERP systems
requires a corporate culture that emphasizes the value of sharing common goals over individual pursuits and the value of trust
between partners, employees, managers and corporations [65].
This issue has also been discussed in [38,55].
 Decision mechanism: The collection of information, the effectiveness and accuracy of data, and the retrieval process are the elements of decision mechanism that play an important role in the
ERP project. It is always necessary to possess accurate and effective information to make the right decisions. The speed of information retrieval is another important factor in making decisions
at the right time [60]. Importance of data accuracy in an ERP
implementation is also addressed by [2,45].

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 Communication: Expectations and goals of the ERP project must

be communicated effectively among stakeholders and throughout all levels of the organization [4247]. Therefore, it is necessary to have a communication plan in place for all stages of the
implementation, which should include the rationale for the ERP
implementation, change management strategies, the project
scope, etc. [42,48]. Communication should be open, clear and
complete to be effective and poor communication creates many
problems for the ERP project [37,54,55].
 Organizational structure: The organizational structure and position hierarchy must be suitable and supportive for the ERP
implementation. The changes made by the ERP system must
be supported by existing management behavior and current
job structures of the organization [66]. The functional units
of the organization must be interrelated properly and the
ownership of data and processes must be dened for each
unit.
5.2.5. Human resources
 Top management support: The IT literature has clearly
demonstrated that for IT projects top management support is
critical to succeed [36]. This also applies to ERP projects and
no single factor is as predictive for success of the ERP project

as the support of top management, particularly early in projects

life [35,37,40,42,44,45,48,49,51]. Top management must
consider the strategic implications of ERP implementation. They
must consider the ERP project as a top priority for the
organization [44,56], fund the project and take an active role
in leading the change. Management must also be involved in
every step of the ERP implementation, monitor the progress of
the project and provide direction to the project teams
[35,38,54,55].
 Personnel: Not only the higher level, but also the lower level
management must support the changes required by the ERP system but the successful implementation of the system requires
commitment and cooperation of personnel from all segments
of the business [16]. It is often said that ERP implementation
is about people, not process or technology [35]. Therefore, the
role of personnel in the ERP implementation success or failure
is inevitable. The personnel must be convinced that the organization is committed to implement the ERP system [2]. They
must recognize the need for change and be properly prepared
for changes to prevent resistance and chaos at the implementation stage. The personnel involvement in the project is also
important; because they will actually be the users of the system.
In addition, they must have enough IT skills and knowledge on
ERP concept.

ERP readiness
assessment

Project Management
Readiness

Project
- Project Championship
- Resource allocation
- Assign responsibilities
- Project team
- Project scope

Organizational
Readiness

Vision and Goals

- ERP implementation Vision

- ERP mission and goals

Systems and Processes

- Existing systems
- Existing processes

Change Management
Readiness

Culture and Structures

- Culture
- Decision mechanism
- Organizational structure
- Communication

Fig. 5. ANP framework for ERP readiness assessment.

Human resources

- Top management
- Personnel

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J. Razmi et al. / Advances in Engineering Software 40 (2009) 11681178

are hard to integrate and have data redundancy. This is identied

as their main drawback.
The companys top management believes that it is not possible
to implement ERP in all departments simultaneously, thus it has
been decided to start the project in only one department of the
company (the department of nancial affairs) at the preliminary
phase and if successful, extend it to other departments at a later
date. A modular approach for implementation of the system is also
considered. Therefore, the readiness assessment program is
bounded to the department of nancial affairs. The documents prepared on the project are analyzed and ERP readiness is surveyed in
this department thoroughly by means of questionnaires and structured interviews based on the ANP model and the assessment factors described in the previous section. In addition, three ERP
experts with extensive experience in a number of ERP implementations in Iranian companies are consulted to weight the factors.
The steps carried out according to the fuzzy ANP algorithm are explained below.

5.3. ANP model

The analytic network process (ANP) model for assessment of
ERP readiness is constructed considering the main areas identied
in Section 5.1 and the factors in Section 5.2 and is shown in Fig. 5
below.
The proposed model is composed of four hierarchical stages:
goal, sub-goals, factors and sub-factors (listed in the box of factors),
which are related to each other by means of conjunctive arrows.
The ERP readiness assessment is the goal of the model and three
main assessment areas identied from the conceptual model in
Section 5.1 are considered as the sub-goals of the model. The goal
is connected to the sub-goals by three unidirectional arrows. The
sub-goals also are connected to each other using bidirectional conjunctive arrows. As stated in Section 5.2, the assessment factors
identied from the literature are categorized into ve main factors
and the underlying factors belonging to each main factor are considered as the sub-factors. Each sub-goal is related to the factors by
single unidirectional arrows. Bidirectional arrows are also used to
describe the inner dependencies among the factors and analyze
their effects on each other. The proposed ANP model is accompanied by fuzzy set theory to assess the readiness level of a rm to
implement ERP system.

Table 5
Pair-wise comparisons and local weights of vision and goals sub-factors.

6. Case study
The proposed model has been applied in an Iranian power (electricity) holding company to measure the rms readiness to implement an ERP system. The company has recently decided to
implement the ERP system in order to improve efciency. This
company has about 1500 employees and composed of six different
functional departments. Three distinct and costly information systems (IS) are used to provide data across the company. The systems

Sub-factors

ERP implementation
vision

ERP mission
and goals

Local
weight

ERP implementation vision

ERP mission and goals

(1, 1, 1)
(1, 1.5, 2)

(0.5, 0.67, 1)
(1, 1, 1)

0.32
0.68

Table 6
Pair-wise comparisons and local weights of systems and processes sub-factors.
Sub-factors

Existing systems

Existing processes

Local weight

Existing systems
Existing processes

(1, 1, 1)
(0.67, 1, 2)

(0.5, 1, 1.5)
(1, 1, 1)

0.50
0.50

Table 3
Pair-wise comparisons and local weights of factors with respect to three sub-goals.
Factors

Project

Vision and goals

Systems and processes

Culture and structures

Human resources

Local weight

Project management readiness

Project
Vision and goals
Systems and processes
Culture and structures
Human resources

(1, 1, 1)
(0.5, 0.67, 1)
(0.33, 0.4, 0.5)
(0.5, 0.67, 1)
(0.67, 1, 2)

(1, 1.5, 2)
(1, 1, 1)
(0.4, 0.5, 0.67)
(0.5, 0.67, 1)
(0.67, 1, 2)

(2, 2.5, 3)
(1.5, 2, 2.5)
(1, 1, 1)
(1.5, 2, 2.5)
(1.5, 2, 2.5)

(1, 1.5, 2)
(1, 1.5, 2)
(0.4, 0.5, 0.67)
(1, 1,1)
(1, 1.5, 2)

(0.5, 1, 1.5)
(0.5, 1, 1.5)
(0.4, 0.5, 0.67)
(0.5, 0.67, 1)
(1, 1, 1)

0.28
0.27
0.02
0.18
0.25

Organizational readiness
Project
Vision and goals
Systems and processes
Culture and structures
Human resources

(1, 1, 1)
(1, 1.5, 2)
(1.5, 2, 2.5)
(2, 2.5, 3)
(1.5, 2, 2.5)

(0.5, 0.67, 1)
(1, 1, 1)
(1.5, 2, 2.5)
(1.5, 2, 2.5)
(1.5, 2, 2.5)

(0.4, 0.5, 0.67)

(0.4, 0.5, 0.67)
(1, 1, 1)
(0.67, 1, 2)
(1, 1.5, 2)

(0.33, 0.4, 0.5)

(0.4, 0.5, 0.67)
(0.5, 1, 1.5)
(1, 1, 1)
(1, 1.5, 2)

(0.4, 0.5, 0.67)

(0.4, 0.5, 0.67)
(0.5, 0.67, 1)
(0.5, 0.67, 1)
(1, 1, 1)

0.02
0.10
0.27
0.29
0.32

(1, 1.5, 2)
(1, 1, 1)
(0.5, 0.67, 1)
(1.5, 2, 2.5)
(1.5, 2, 2.5)

(1.5, 2, 2.5)
(1, 1.5, 2)
(1, 1, 1)
(2, 2.5, 3)
(1.5, 2, 2.5)

(0.5, 0.67, 1)
(0.4, 0.5, 0.67)
(0.33, 0.4, 0.5)
(1, 1, 1)
(0.67, 1, 2)

(0.5, 0.67, 1)
(0.4, 0.5, 0.67)
(0.4, 0.5, 0.67)
(0.5, 1, 1.5)
(1, 1, 1)

0.22
0.12
0.02
0.33
0.31

Change management readiness

Project
(1, 1, 1)
Vision and goals
(0.5, 0.67, 1)
Systems and processes
(0.4, 0.5, 0.67)
Culture and structures
(1, 1.5, 2)
Human resources
(1, 1.5, 2)

Table 4
Pair-wise comparisons and local weights of project sub-factors.
Sub-factors

Project championship

Resource allocation

Assign responsibilities

Project team

Project scope

Local weight

Project championship
Resource allocation
Assign responsibilities
Project team
Project scope

(1, 1, 1)
(0.4, 0.5, 0.67)
(0.4, 0.5, 0.67)
(0.67, 1, 2)
(0.5, 0.67, 1)

(1.5, 2, 2.5)
(1, 1, 1)
(0.5, 1, 1.5)
(1, 1.5, 2)
(1, 1.5, 2)

(1.5, 2, 2.5)
(0.67, 1, 2)
(1, 1,1)
(1, 1.5, 2)
(1.5, 2, 2.5)

(0.5, 1, 1.5)
(0.5, 0.67, 1)
(0.5, 0.67, 1)
(1, 1, 1)
(0.4, 0.5, 0.67)

(1, 1.5,2)
(0.5, 0.67, 1)
(0.4, 0.5, 0.67)
(1.5, 2, 2.5)
(1, 1, 1)

0.28
0.14
0.10
0.27
0.21

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Table 7
Pair-wise comparisons and local weights of culture and structures sub-factors.
Sub-factors

Culture

Decision mechanisms

Organizational structure

Communication

Local weight

Culture
Decision mechanisms
Organizational structure
Communication

(1, 1, 1)
(0.4, 0.5, 0.67)
(0.5, 0.67, 1)
(0.5, 0.67, 1)

(1.5, 2, 2.5)
(1, 1, 1)
(0.5, 1, 1.5)
(1.5, 2, 2.5)

(1, 1.5, 2)
(0.67, 1, 2)
(1, 1, 1)
(1, 1.5, 2)

(1, 1.5, 2)
(0.4, 0.5, 0.67)
(0.5, 0.67, 1)
(1, 1, 1)

0.37
0.15
0.17
0.31

Step 1: The assessment factors and the ANP model have been
completely described in Sections 5.2 and 5.3,
respectively.
Step 2: For each of three sub-goals, the local weights of the factors are determined using pair-wise comparisons performed by the experts. Each expert was separately
asked to describe the preferences by means of linguistic
variables in Table 1. In the cases where the assigned
variables were far from each other, they were asked to
rene their judgments. Nevertheless, where consensus
was not achieved, they were asked to explain why such
values were assigned. Thus, one of the judgments was
picked considering their explanations. The pair-wise
comparisons are also performed for the sub-factors
belonging to each main factor to determine their local
weights. The local weights are calculated based on the
method explained at Step 2 in Section 4.2. The results
are illustrated in Tables 38.
Step 3: The dependencies among the factors are taken into
account and the inter-dependency matrices are constructed using pair-wise comparisons made by the
experts. The procedure outlined in the previous step
Table 8
Pair-wise comparisons and local weights of human resources sub-factors.
Sub-factors

Top management

Personnel

Local weight

Top management
Personnel

(1, 1, 1)
(0.5, 0.67, 1)

(1, 1.5, 2)
(1, 1, 1)

0.68
0.32

is also used here to achieve unique judgments. For each

of the ve factors, a matrix is formed and relative
importance weights are calculated. Table 9 represents
the results and Table 10 gives the interdependent
weights of the factors considering each sub-goal.
Step 4: The global weights of the sub-factors are calculated
using interdependent weights of the factors from Step
3 and local weights of the sub-factors from Step 2 with
respect to each sub-goal. Using the results given in
Table 10, the most important sub-factors that affect
ERP readiness in its three main areas are identied.
Step 5: The measurement of sub-factors is carried out using
several questionnaires and structured interviews. The
results are expressed by linguistic variables of Table
2. The assigned variables to the sub-factors are given
in Table 11.
Step 6: The readiness level of the nancial affairs department
for the ERP is calculated using the global weights of
sub-factors and fuzzy values of their assigned linguistic
variables. In addition, the calculations are performed
separately for each of three main readiness areas. The
results are given in Table 11.
According to the nal scores, the overall readiness in the nancial affairs department is at a medium level with minimum score in
the organizational area. The results show that the project scope,
implementation vision and the system goals have been dened very
well. However, major difculties can be seen to be related to organizational culture, communication and especially personnel. Thus,

Table 9
Inter-dependency matrices and relative importance weights of the factors.
Vision and goals

Systems and processes

Culture and structures

Human resources

Weight

Project
Vision and goals
Systems and processes
Culture and structures
Human resources

(1, 1, 1)
(0.4, 0.5, 0.67)
(0.67, 1, 2)
(0.67, 1, 2)

(1.5, 2, 2.5)
(1, 1, 1)
(1.5, 2, 2.5)
(1.5, 2, 2.5)

(0.5, 1, 1.5)
(0.4, 0.5, 0.67)
(1, 1, 1)
(1, 1.5, 2)

(0.5, 1, 1.5)
(0.4, 0.5, 0.67)
(0.5, 0.67, 1)
(1, 1, 1)

0.31
0.06
0.29
0.34

Vision and goals

Project
Systems and processes
Culture and structures
Human resources

(1, 1, 1)
(0.5, 0.67, 1)
(0.67, 1,2)
(0.67, 1, 2)

(1, 1.5, 2)
(1, 1, 1)
(0.5, 0.67, 1)
(0.67, 1, 2)

(0.5, 1, 1.5)
(1, 1.5, 2)
(1, 1, 1)
(0.67, 1, 2)

(0.5, 1, 1.5)
(0.5, 1, 1.5)
(0.5, 1, 1.5)
(1, 1, 1)

0.27
0.25
0.23
0.25

Systems and processes

Project
Vision and goals
Culture and structures
Human resources

(1, 1, 1)
(0.67, 1, 2)
(1, 1.5, 2)
(1.5, 2, 2.5)

(0.5, 1, 1.5)
(1, 1, 1)
(1, 1.5,2)
(1.5, 2, 2.5)

(0.5, 0.67, 1)
(0.5, 0.67, 1)
(1, 1, 1)
(1, 1.5, 2)

(0.4, 0.5, 0.67)

(0.4, 0.5, 0.67)
(0.5, 0.67, 1)
(1, 1, 1)

0.13
0.17
0.29
0.41

Culture and structures

Project
Vision and goals
Systems and processes
Human resources

(1, 1, 1)
(0.67, 1, 2)
(1.5, 2, 2.5)
(1, 1.5, 2)

(0.5, 1, 1.5)
(1, 1, 1)
(1.5, 2, 2.5)
(1, 1.5, 2)

(0.4, 0.5, 0.67)

(0.4, 0.5, 0.67)
(1, 1, 1)
(0.4, 0.5, 0.67)

(0.5, 0.67, 1)
(0.5, 0.67, 1)
(1.5, 2, 2.5)
(1, 1, 1)

0.11
0.15
0.48
0.26

Human resources
Project
Vision and goals
Systems and processes
Culture and structures

(1, 1, 1)
(0.4, 0.5, 0.67)
(0.67, 1, 2)
(0.67, 1, 2)

(1.5, 2, 2.5)
(1, 1, 1)
(1.5, 2, 2.5)
(1.5, 2, 2.5)

(0.5, 1, 1.5)
(0.4, 0.5, 0.67)
(1, 1, 1)
(1, 1.5, 2)

(0.5, 1, 1.5)
(0.4, 0.5, 0.67)
(0.5, 0.67, 1)
(1, 1, 1)

0.31
0.06
0.29
0.34

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Table 10
Global weights of sub-factors with respect to three sub-goals.
Factors

Weight on project
management readiness

Weight on organizational
readiness

Weight on change
management readiness

Project
Project championship
Resource allocation
Assign responsibilities
Project team
Project scope
Vision and goals
ERP implementation vision
ERP mission and goals
Systems and processes
Existing systems
Existing processes
Culture and structures
Culture
Decision mechanisms
Organizational structure
Communication
Human resources
Top management
Personnel

0.23
0.064
0.032
0.023
0.062
0.048
0.20
0.064
0.136
0.13
0.065
0.065
0.21
0.078
0.032
0.036
0.065
0.23
0.156
0.074

0.11
0.031
0.015
0.011
0.030
0.023
0.11
0.035
0.075
0.26
0.130
0.130
0.25
0.093
0.038
0.043
0.078
0.27
0.181
0.086

0.19
0.053
0.027
0.019
0.051
0.040
0.13
0.042
0.088
0.16
0.080
0.080
0.27
0.100
0.041
0.046
0.084
0.25
0.170
0.080

Table 11
Assigned linguistic values to sub-factors and calculated levels of readiness.
Factor

Sub-factor

Linguistic scale value

Project

Project championship
Resource allocation
Assign responsibilities
Project team
Project scope

75
75
75
75
100

Vision and goals

ERP implementation vision

ERP mission and goals

100
75

Systems and processes

Existing systems
Existing processes

50
50

Culture and structures

Culture
Decision mechanisms
Organizational structure
Communication

Human resources

Top management
Personnel
Readiness score

Project management readiness

4.8
2.4
1.725
4.65
4.8

Organizational readiness

Change management readiness

2.325
1.125
0.825
2.25
2.3

3.975
2.025
1.425
3.825
4

3.5
5.625

4.2
6.6

3.25
3.25

6.5
6.5

4
4

25
75
50
25

1.95
2.4
1.8
1.625

2.325
2.85
2.15
1.95

2.5
3.075
2.3
2.1

75
0

11.7
0
60.950

13.575
0
53.800

12.75
0
56.775

6.4
10.2

the company should plan to perform a number of short term projects in order to improve the reception to a new system. For instance, it is strongly needed to arrange training programs for the
personnel and familiarize them with the project. The improvements
achieved in readiness levels can be evaluated by performing the
assessment program at predetermined time stages, for example,
after 36 months. Higher levels of readiness assure a greater degree
of ERP success and prevent encountering major challenges later at
the implementation phase.
7. Summary and conclusions
This paper, rst, elaborated on the importance of readiness
assessment prior to employing an ERP system. It was shown that
this is a complex decision making problem with parameters that
can best be expressed in linguistic values. Such values are somewhat vague in essence and are based on expert judgment, thus
they incorporate uncertainties. Therefore, in order to deal with
this problem appropriately, the ANP technique was extended into
a fuzzy domain. A practical framework was developed to calculate the ERP readiness assessment measures using this fuzzy
ANP.

Using this model, the current state of readiness of the organization to implement an ERP project and possible areas of improvements prior to implementation can be identied. The framework
decomposes ERP readiness into three main parts: project management readiness, organizational readiness and change management readiness. These assessment areas have been determined
based on the proposed conceptual model that better explains the
ERP project. The factors contributing to the assessment have been
identied after an in-depth study of CSFs on ERP implementation.
The attributes related to ERP implementation have been classied
into ve main categories of project, vision and goals, systems
and processes, culture and structures, and human resources
and arranged in a network structure.
The proposed model was then applied to an Iranian power holding company. The results illustrated that it is too early to start the
ERP project for this company. It was suggested that the rm is better off doing some preliminary preparation to increase the receptivity of the personnel rst prior to initiating the ERP project. It
should be noted that the cost of using the proposed model is negligible for a company compared to the huge cost of creating an ERP
system and even more considerable cost of a failed ERP system. Despite the fact that further validation of the proposed model is left

J. Razmi et al. / Advances in Engineering Software 40 (2009) 11681178

for future research and the long term benets of using the model
will only be proven over time, the proposed model is a practical,
easy to use and worth-to-consider tool for real case problems. Further examples are not necessary at this point because the model is
constructed such that all major elements and factors are included
in the assessment process and the only advantage of using more
examples would be to ne-tune the model and to investigate the
weights assigned to the assessment factors for the problem at
hand. This ne-tuning depends always on the elements of the system being studied and, thus is case dependant. All the fuzzy classes
and expert judgments must be modied for any new case. The values of variables t for one problem are not necessarily best values
for another. The proposed framework, on the other hand, is developed such that can be used by any rm to assess the readiness to
implement an ERP system. The correlation among ERP readiness level of the rm and success in achieving the goals of ERP project is
noted as another interesting subject of research.

Acknowledgements
We would like to express our appreciation for the Iran National
Science Foundation (INSF) for the nancial support of this study.
We are also grateful to the respected reviewers for their valuable
comments in the preparation of the nal revised manuscript.

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