Chapter 5 : Critical success Factors for ERP System Selection ...

CHAPTER 5 Acc. Rec.

CImhpapletmere5n:taCtriiotincaalnsducPcoessts-IFmapctloemrsefonrtaEtRioPnSystem Selection, DB

Revenue CR

DB CR

Christian

Factoprryooduutcptiuotn

Leyh ? Critical Success

Finpisrhoedduct CR

LeyhI(nTvecenhtaconrhygenCiRscheDBUniversit?t Dresden)

DB

Factors for ERProoPudt.pSutysCRtem

FinpisrhoeDddBucts CR

DB

Conrsa.w CR DB

Selection,

Rmawaterial CR DB

ImplementAacct.DiPoBayn. CaR ndDBPost-Implementa4t1i0on

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5.1 Introduction

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strongly fragmented.

In section 3, critical su4c1c1ess factors that were focused on during

the review will be explained in detail. The fourth section deals

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acclaim of the conducted literature review.

This multitude of software manufacturers, vendors, and systems

means it is essential for enterprises that use or want to use ERP 5.2 Data Collection Methodology ?

systems to find the right software, as well as to be aware of the

Literature Review

factors that influence the success of the implementation project

(Winkelmann & Leyh 2010). Recalling these so-called critical The literature review to identify CSFs was performed in several

success factors (CSFs) is of high importance whenever a new steps similar to the approach suggested by Webster & Watson

system is to be adopted and implemented, or a running system (2002). In general, it was a database-driven review with an

needs to be upgraded or replaced. Errors during selection, additional search in the proceedings of several IS conferences.

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vencies. Several examples of such negative scenarios can be found in the literature (e.g., Barker & Frolick 2003; Hsu, Sylvestre Indreepqeunird&IseenmynetSsonttareydmeedritm2o0pi0dl6ee)mn. teifnytfaatciotonrsptrhoajetcatfsf,escetvthereasluccacseessstourdfaieilsu,rseuorvf eERysP, and literature reviews were already conducted by different researchers (e.g., Esteves & Pastor 2000; Finney & Corbett 2007;

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is given in Figure 1. With reduced according to the

Step 1: The first step was to define sources for the literature rinegvisewwe. rTehiedreenfotirfeie, dse(cvpeMP.roaIAGstlOprgedopcoeaeidptsntasdbiaxs)e. s and conference proceed-

Nah, Zuckweiler & Lau 2003). Most of these literature reviews Step 2: During this step we had to define the search terms for

cannot be reproduced because of missing descriptions of review methods and procedures. Vom Brocke et al. (2009) clearly point out the drawbacks of literature review articles lacking methodological rigour. Therefore, in order to update existing reviews braemyvioiennwcglu?sdeianvegsryacsluterprmreonactteicEeRdrPeinvgliietseworafitnuinrfteiev, rewnadetiifcofoennraedlnuctcodtneafdetarabenaliscteeessr,a.RtaaTuwnhrmdeeat

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the conferences, only inappropriate search fields were provided.

Hence, we decided to manually review abstracts and titles of the

papers in this step.

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CRCHAPTER

5

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Invecnhtaonryge CR

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Leyh

?

Factoprryooduutcptiuotn

Critical Success

Factors

for

ERProoPudt.pSutysCRtem

Selection,

Figure

1

-

FinpisrhoeDddBucts CR

Progress of the

DB

Literature

Conrsa.w CR

RRemavwaDtiBeeriawl CR

DB

ImplementAacct.DiPoBayn. CaR ndDBPost-Implementa4t1i0on

MpCraOos4ds1ureclteioasneorder

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Databases

Step 1 & 2 5429

Step 3

3489

Step 4

506

Step 5

185

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411

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or or

articles where CSFs are derived from chosen literature. Within

duplicates, 3419 articles remained. From the conference search, these papers, the following 31 CSFs were identified:

79 papers remained. A total of 3498 papers were identified during the initial search step (cp. Figure 1).

Step 4: Step 4 included the identification of irrelevant papers. During the initial search we did not apply any restrictions. The search was not limited to the research field of IS; therefore,

? Available Resources (budget, employees, etc.) ? Balanced Project Team ? Business Process Reengineering ? Change Management

papers from other research fields were included in results, ? Clear Goals and Objectives (vision, business plan, etc.)

too. Thus, these papers had to be excluded. This was done by ? Communication

reviewing paper abstracts and, if necessary, by looking into the

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Step 5: The fifth and final step consisted of a detailed analysis of the remaining 506 papers, and the identification of the IndreepqeunirdCdEeemnmeSetnpFtpsth.haTfshoiesr rtwehfaeosprepu,lratphcoeesdecononofttceoantntelgyooforanilzltin5hg0e6iwdpeoanrpdtieifniregsdwosfautschcreeesvsesieffwaaccettdoorrissn,. but also their meaning. After this step, 185 relevant papers that suggested, discussed, or mentioned CSFs remained. The analy-

? ERP SysPtuerchomardseerConfiguration405

? ERP System Tests

? External Consultants

? ?

IInnvteorldveepmaerntmt oefnEtanldMPC-oIUoGstOorsgeoecpoeridepsstrsaantidonStakeholders

sis results of these 185 papers mentioning CSFs are described in the following sections.

? IT Structure and Legacy Systems

? ?

Knowledge Monitoring

Management and Performance

MGeooadssreuceripet ment

406

5.3 Critical Success Factors of ERP

GR?/IR OCrRganizational Culture

Implementation Success

mat

A critical success factor for ERP projects is defined by FinneyRaawnd CR

?DB Organizational Fit of the ERP System ? Organizational Structure

PMoIsRtOinvoice

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? Project Champion

? Project Leadership/Empowered Decision Makers

? Project Management ? Skills, Knowledge anAdcc.EPaxyp. CeR rtise

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CRCHAPTER 5

Factoprryooduutcptiuotn

Leyh ? Critical Success

? ?

TToropuMblaenshagoeomtinegntFiSnpisurhoepdducpt oCRrt and Involvement

? ?

UUsseeroTfraaiSntIinenveegcnhtraonirnygegCRComDB mittee

? Vendor RelatiDoB nship and Support

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An appropriate budget is the basis for a solid project execution. If the budget allocated is too small other success factors can be negatively affected (Achanga et al. 2006).

& Al-Mudimigh 2003). Change management strategies are

responsible for handl4in1g1 enterprise-wide cultural and structural

changes. Therefore, it is necessary to train and educate employ-

ees in various ways. Thereby, change management not only

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on is important to achieve this understanding. A support team

should also be available during user training sessions, in order

to clarify and answer questions regarding new processes and

functions. Furthermore, an additional evaluation with end users

Balanced Project Team: In general, a project team consists should be accomplished after the "go live" to uncover problems of at least two people working together for a common goal, and avoid discord (Loh & Koh 2004).

whereby each team member has defined responsibilities and Clear Goals and Objectives (vision, business plan, etc.):

functions (Humphrey 2000). The characteristics of the team Clear goals and objectives are seen as CSFs by many researchers

members should complement each other, their experience, (e.g., Esteves & Pastor 2000; Nah et al. 2001; Somers & Nelson

their knowledge, and their soft skills (Hesseler & Goertz 2007). 2001). This requires formulating a business vision, calculating a

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Only then can they fully concentrate on the project and not be

disturbed or distracted with their daily business (Shanks & Parr

Indreepqeunird2Beeemn0euet nr0sti0nin)g.e(sBsPRP)rioscaecsrsucRiealepnrgoijneecteprihnagse:

Business process reenginin ERP projects, although it

often leads to delays in ERP implementation (Kumar et al. 2003).

During ERP projects companies have to review their business

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that outlines proposed strategic and tangible benefits, includes

resources, calculates costs and risks, and specifies a clear tv(Liemorhyelh&ineKelpoifshucl2rt0iot0imc4a)a.l itnotaainnMPofIEGsotROrcgePocuoesidppstorsonjepcrot.jeTchtebseeninesfittrsuamnednotus tccaonmbees

processes, and explore new ways of doing things relative to best practices embedded in the ERP system. The deeper and more detailed this review, the better the outcome of the BPR

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will be (Francoise et al. 2009; Rajagopal 2002). Changing activities and workflows in business processes before, during, or after tlteohvemeEliRnoPifmEimiRzePpltsehymesteeenxmtteactniotononffimgERuaPryaslteyioasndte(tmRoemamdouidfsfief2irc0ea0nt7ito).annI.tdTishmiasidnrevimdisRuaiazwcbeemldesat enmc2h0reara0wonn0reags)r.g,eveaetmnhrdseeinoirttnhDbssoaselmuheaerseoscntviiecuonndulmeedsrseRpsdalwcaeoepmnnacsaruytsiomedrepicatceslieoa.nItsnTnovsehnestwomoeslrdyrhpctoehrooaarfdntouegfceetirteex,tathteshienleytEtpRthraPeokjesceyocsamttdetpvemaaannm(ytRaoohgrsaeastorDtoiBpoof

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platform (Al-Mashari et al. 2003). Expectations at every level

need to be communicated (Loh & Koh 2004). The communica-

tion between management, the project team, and employees should be clear on a reguAclca. Praby. aCRsis.

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have to be linked with the company's long-time strategic goals. is based on best practices, a configuration or adaption of the

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systems is the availability of accurate data. Problems concerning data can cause heavy implementation delays. Therefore, data migration management represents a critical factor throughout implementation (Somers & Nelson 2001; Umble, Haft & Umble 2003). Identifying which data has to be loaded into the system and which is extraneous, as well as converting all disparate data structures into a single consistent format is an important challenge. The conversion process is often underestimated. In

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every try to

adopt the processes and options built into the ERP as much as

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tion project. Hence, a good business vision is helpful because

it reduces the effort of capturing the functionality of the ERP

business model and therefore minimizes the effort needed for

the configuration (Esteves & Pastor 2000). Extensive system

modifications will not only cause implementation problems,

but also harm system maintenance. Therefore, fewer adjust-

ments reduce the effort of integrating new versions, releases or

updates (Loh & Koh 2004).

addition, interfaces with other internal and external systems ERP System Tests: In ERP implementation, "go live" on the

(between departments such as accounting, production, data system without adequate and planned system testing may lead

warehouses, 2001).

etc.EM)xeDhc0ua1tevMeRPto

be

considered,

too

(Somers

&

Nelson

Environment (national culture, language, etc.): The effects

and the relevance of national cultures to ERP implementation

are pointed out in several studies (e.g., Krumbholz & Maiden

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Cultural differences can cause problems during an ERP project,

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/ functions, and the system as a whole (Al-Mashari et al. 2003;

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use and

of external experience at

consultants the moment

such as different beliefs in providing access to information, of project initiation (Esteves & Pastor 2000). Many organiza-

miscommunication due to language difficulties, or problems in reengineering organizational processes (Xue et al. 2005).

ERP System Acceptance/Resistance: Every person and

department should be responsible and accountable for the

whole ERP system, and have to be committed fulltime basis (Zhang et

aktloe. y2t0uh0se5e)ri.msTfphroleemrmefeodnrifetfa,etarieolnnatckpdreoopfjeaucrsttemroReaanwnnmtdasat

CR

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& Nelson 2001). Therefore, it is necessary to determine the

number of consultants, how and when to use them, as well as

their responsibilities within the implementation project (Esteves

& Pastor 2000).

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Rec.

DB

CRCRevHIaaEateDnhntncRBAueterPeeoPECasrsRsRhtdsTyPaestfErhutpiseRnenaymgcsrs5tttaeiomaommffInnefvceeaenconchiltattDolmtnreBaasygeivnlmseaCdCRlolFnliondnoepisborheocfDedgupdepBuisocnseatisantrrCaRetlaesmrntsyiisseonitLntsnuyhettne:aayaiahtlTtndsob?adolaoCsluneufrdindncetedcgimcebpaaaspuargFlasirhsceeSfttoiupsamnmurryo.sloedclueiueyTcztscpntnhesiiuonittntsims,sgpssprrFcioielnnaoecqcdcomeuteispoFviiesnrierapieednsrshronssetD--dfdBuoctsrCtDd(heREBhxaeRuPaacrspooPrstuhdiDtatk.npBoSaCiruesogtyntnrbrmDssaCgv.EiwBRetnieReeledldPnmeCsiRtsteiwspmaSRtmabeiewaaatpDtnllhBneliel.rssieida2cnhlamC0tRbeiat0oedlhce0nnret)o,to.tasIpTomesthrinootupfhsjunsleueen,ckramcetnckteototinoehnmwoanatAwlmpatacePctliar.ldon,DiePdnoaBgaufadocyyonnrtne.digordeCndra(RmmeFndrmwaudaitvsDinaitBPtoinhcsobnoiaosaeigwtsnl-leseaiIhlmomlleatbbephrteenoleeadcMturpClmopraO.naops4rdsre2md1erourene0caolcotec0tripoeainatsn94eselltgeo1y)ssi.r0odenr MprDRoe0dl7uecatsieo

ual pursuits. Also, to share information within a company and

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involved in the ERP project (e.g., external consultants or the ERP

vendor's employees).4I1n1addition, the organization must ensure

the transfer of as much knowledge as possible from consultants

or ERP vendors, in order to be able to use the new ERP system

aMoufoptonrnoitjooemcritonmugsalanynaC(dgFOCpo1re5rnaPomndremucecrtofniooints,remmeeatcnahcl.ae2n03Mis00m5e9a)s.sfuorrepmerefonrtm: aInnctehemceoansuterext-

ment have to be established. Measuring and evaluating perform-

one of the most frequently cited CSFs (Esteves et al. 2003). Users ance is a critical factor for ensuring the success of any business

and stakeholders must perceive the system as being important organization (Al-Mashari et al. 2003). Constant measurement

and necessary to their work (Barki & Hartwick 1991). Therefore, and monitoring of the progress enables early discovery of errors

involvement and participation in the ERP project is mandatory and gaps, as well as their removal or correction (Al-Mashari &

for all end-users and stakeholders affected by the ERP imple- Al-Mudimigh 2003).

mentation, and will result in meeting more user requirements, Organizational Culture: Organizational culture is embedded

better system quality, and an increase in use and acceptance within national culture, and is therefore a critical factor affect-

(Esteves & Pastor 2000). It is important to get users and stake- ing ERP system implementation. Every company has its own

holders involved during system implementation, and to make unique organizational culture, which may or may not be strong

uetoxsepGeohrfotistshhee(ia2rn0kd0n2ok),EwMnxteDolhce0uw1itdselgMeinRedPvgionelvae(rFmeraaesnncwtohiinseerteheetthpaerlo.pjre2o0cjt0e,9cf)tr.otAmeacmcsotarldraticnktgos finish, is just as crucial as the involvement of top management.

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IT Structure and Legacy Systems: It is critical to assess the company' IT readiness, including IT architecture and employee

es. are

TchoenssetrcahiPnuarcehnoarddsgeerebsy

bito(tKhruimmpba4hc0ot5ltzh&e

organization?s Maiden 2001;

culture, and Zhang et al.

Indreepqeunirdssdeemkaneetirnplytlse, n(iFndifnirnangsetyroun&ctCEuoRrePrbmesytitsgt2he0tm0n7re;eeSqdoumitroeemrbsee&nutNspeg(lKsrouandme2adr00oe1tr).

If neceschanged al. 2002;

Palaniswamy & Frank 2002). Also, the current legacy systems

need attention. It is important that an organization approach-

2005).

Stoiorogmnaenreirzqeausteiiroaenrsc'shthceuarstrraeerintghtueseMPtrorItGsutthOhrcgeaoectoetuidptarsetesscuahncncdoelcsousgflutyulbrteee,codhrentsohiglaontgetihcdeatlooinrgfnitaontvhiaze-ation's structure and culture has to be redesigned and changed

es the transition of a legacy system carefully and develops a comprehensive plan. During ERP projects, existing legacy systems must be carefully reviewed, defined, and evaluated in

tOorfgitatnhiezanteiowntaelchFnitoolofgtyh(eCaEbRrPerSayeGsottodeaslmre.c2eip:0t T0h1e; Yfuascutfteh4ta0at6l.a2n0E0R4P).

order to prepare for possible problems and hindrances that may

arise during implementation (Al-Mashari et al. 2003; Holland &

Light 1999; Nah et al. 2001).

mat

Knowledge Management: Knowledge management duRrawing

CR

saNtaGhynlRese/DdfIvBRtiiteremrciECstRoRh'slnPeoslwoeipdrs.agesHc,rakeonEadnRigzPgaebt,v&ieoeefvnnKoeadirmenlorfi(isif2ttsi0ttes0hini2smod)oupetbllmodevmipsobeieuretniscutattaplhhtlyioaobtrenloitxnuhadsgPeMmoohIscRuotilOoniynnrnvgedofdaeisciednxtaieolzomnagwctiieniocheanaidnlt-.

Ekj&wonRibPtPohrswiicianmlenetdp2dh0lgbee0eml4uo)irer.sDgsntIoatrlamsetaeiarnoessdtvtiimeczicinotuarieenuotswiRcnoapiwchaanomrnall.soauitttnmEejorepimtuatlcrieonantpIxnsi-vcqleoonhsutirooysalrgdeyenpcaahreoagnsndnsuigeicneztpicakmoetnispoosEowneRrsaltPseladbnapgotrkeuofnnajaeocdncwtadtorlsreip.edrrsSeogh(dbeJaeolberfnaiimnnDseBgeess

extent the implementation success of an ERP system depends on the fit between company and ERP system, and found out that

Acc. Pay. CR

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on Enterprise Resource Version - send comments to

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