IDENTIFICATION OF CRITICAL SUCCESS FACTORS

TO ERP PROJECT MANAGEMENT

An Application of Grey Relational Analysis and Analytic Hierarchy Process

Chandra Sekhar Dronavajjala, Sreeraju Nichenametla

ABV-IIITM, Gwalior, India

Rajendra Sahu

Associate Professor, ABV-IIITM, Gwalior, India

Keywords: Project Management, Enterprise Resource Planning (ERP), Grey Relational Analysis, Analytic Hierarchy

Process (AHP).

Abstract: ERP system implementations are complex undertakings and many of them are unsuccessful. It is therefore

important to find out what the critical success factors, or CSFs, are, that drive ERP project success. In the

present article we identified 17 CSFs from the literature survey and the responses of questionnaire from

various targeted respondents which include some of the International Inc.’s of ERP Vendors, ERP

Customers and ERP implementing companies. Based on the ground theory of analysis these 17 CSFs are

grouped with regard to Project Management (PM) knowledge areas of time, quality, cost, scope and

expectation. And finally analyzed the questionnaire responses using Grey Relational Analysis and Analytic

Hierarchy Process (AHP) for finding the CSFs contribution to the success of ERP project management. We

further analyzed the set of questionnaire responses for a group that is unable to reach a compromise to make

a decision.

1 INTRODUCTION

ERP (Enterprise Resource Planning) systems may

well count as ‘the most important development in

the corporate use of information technology in the

1990s’. ERP implementations are usually large,

complex projects, involving large groups of people

and other resources, working together under

consider able time pressure and facing many

unforeseen developments. Not surprisingly, many of

these implementations turn out to be less successful

than originally intended.

Over the past few years, a considerable amount

of research has been conducted into critical success

factors, or CSFs, for ERP implementations and IT

implementations in general. Such factors typically

include top management support, sound planning,

end user training, vendor relations, project

champions, interdepartmental collaboration and

communication and the like. Now we even have

available a ranked version of such a list, based upon

a survey among managers of organizations that have

recently gone through an ERP implementation

process (Somers and Nelson 2001). However, at

present it is not yet clear how these CSFs interrelate.

In the present article we identified 17 CSFs from

the literature survey and the responses of

questionnaire from various targeted respondents

which include ERP Vendor: SAP, ORACLE; ERP

Customers HEINKEN, British Waterways, Coca-

Cola, Philips, Alstom, ABN-AMRO, Nestle, BMW,

McDonals’s, Nike, British Gas, Shell, Sony, Fiat and

ERP implementing companies: Accenture, IBM,

LogicaCMG, Cap Gemini. Based on the ground

theory of analysis these 17 CSFs are grouped with

regard to Project Management (PM) knowledge

areas of time, quality, cost, scope and expectation

and analyzed the questionnaire responses using Grey

Relational Analysis and Analytic Hierarchy Process

(AHP) for finding the CSFs contribution to the

success of ERP project management. We further

analyzed the set of questionnaire responses for a

group that is unable to reach a compromise to make

187

Dronavajjala C., Nichenametla S. and Sahu R. (2009).

IDENTIFICATION OF CRITICAL SUCCESS FACTORS TO ERP PROJECT MANAGEMENT - An Application of Grey Relational Analysis and Analytic

Hierarchy Process.

In Proceedings of the 11th International Conference on Enterprise Information Systems, pages 187-192

DOI: 10.5220/0002186801870192

 SciTePress

a decision.

2 LITERATURE SURVEY

A considerable amount of research has been

conducted into critical success factors, or CSFs, for

ERP implementations (eg Holland & Light, 1999;

Sumner, 1999; Willcocks & Sykes, 2000) and IT

implementations in general (Reel, 1999; Marble,

2000). Such factors typically include top

management support, sound planning, end user

training, vendor relations, project champions,

interdepartmental collaboration and communication

and the like. In a paper by Toni Somers and Klara

Nelson 2001, a very useful and well-grounded

ranked list of CSFs for ERP implementation is

presented. The 21 CSFs in this list were first

compiled from a meta-study of over 110 ERP

implementation cases described as well as on the

general literature on IT implementation, BPR

(Business Process Reengineering) and project

management.

PMBOK (Project Management Institute 2000)

identifies nine knowledge areas upon which project

management is based. These nine areas, although

presented as distinct features are usually totally

integrated, as are their component processes. Some

of the key areas used in our research are: 1. ERP

Project Scope Management: Wood and Caldas

(2000), Shanks et al. (2000), Davenport (1998),

Scott et al. (2000). 2. ERP Project Time

Management: McKie (1999), Bingi et al., (1999). 3.

ERP Project Cost Management: Berger (1998),

Stedman (1998). 4. ERP Project Quality

Management: Shanks et al. (2000). 5. ERP Project

Expectation Management: Stefanou (2000).

3 IDENTIFICATION OF CSFS

FOR MANAGING ERP

PROJECT MANAGEMENT

We have given the detailed explanation of each and

every CSF (numbering is done in such a way to

interpret say 1, 2,..., 17 as CSF 1, CSF 2,..., CSF 17)

and the source from where it is derived as described

below:

1. Top management commitment: Sustained

management commitment at top during the

implementation, in terms of their involvement and

the willingness to allocate valuable organizational

resources (Holland et al. 1999). Management

support is important for accomplishing project goals

and objectives and aligning these with strategic

business goals (Sumner 1999).

Source: Charles 2003, Janet Lee, Marc 2003, Brian

2003, Buckhout 2001, Peter (pemeco), Buckhout,

1999; Sumner, 1999; Wee, 2000; Holland et al.,

1999; Jinghua Kuang 2002, HEINKEN , British

Waterways, Coca-Cola, Philips, Alstom, ABN-

AMRO, Nestle, BMW, McDonals’s, Nike, British

Gas, Shell, Sony, Fiat

2. Employee support and involvement: User

participation refers to the behaviors and activities

that employees perform in the system

implementation process. Employee involvement

refers to a psychological state of the individual, and

is defined as the importance and personal relevance

of a system to a user (Hartwick and Barki 1994).

Employee involvement and participation will result

in a better fit of user requirements achieving better

system quality, use and acceptance.

Source: James 2004, Brian 2003, HEINKEN ,

British Waterways, CocaCola, Philips, Alstom,

ABN-AMRO, Nestle, BMW, McDonals’s, Nike,

British Gas, Shell, Sony, Fiat

3. Clearly defined goals, objectives and scope of

implementation: This factor is related with concerns

of project goals clarification and their congruence

with the organizational mission and strategic goals.

This includes both scope definition and subsequent

scope control. Some components of this factor are:

scope of business processes and business units

involved, ERP functionality implemented,

technology to be replaced/upgraded/integrated, and

exchange of data.

Source: James 2004, Charles 2003, Best Foods,

Phillips, BPCL Buckhout et al., 1999, J .S.

Reel,IEEE; Wee, 2000; Falkowski et al., 1998;

Rosario, 2000, HEINKEN , British Waterways,

CocaCola, Philips, Alstom, ABN-AMRO, Nestle,

BMW, McDonals’s, Nike, British Gas, Shell, Sony,

Fiat

4. Proper balance of IT and Business Emphasis:

ERP implementation is not just any technical

implementation, it is software which affects the

business processes of a organizations. So while

deciding on the scope of implementation both the

technical side and business side should be taken into

consideration.

Source: James 2004, Campbell 2000, HEINKEN ,

British Waterways, CocaCola, Philips, Alstom,

ABN-AMRO, Nestle, BMW, McDonals’s, Nike,

British Gas, Shell, Sony, Fiat

5. Adequate Project Planning: This means to have

a well-defined plan/schedule for all the activities

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involved in the ERP implementation, with an

appropriate allocation of budget and resources for

these activities. Evidence shows that the majority of

projects fail to finish the activities on time and

within budget.

Source: James 2004, Brian 2003, Janet Lee, Peter

(pemeco), Rosario, 2000; Holland et al., 1999,

Sumner, 1999; Wee, 2000, HEINKEN , British

Waterways, CocaCola, Philips, Alstom, ABN-

AMRO, Nestle, BMW, McDonals’s, Nike, British

Gas, Shell, Sony, Fiat

Project monitoring at every stage: To ensure the

project completion according with the plan/schedule,

close monitoring and controlling of time and costs is

necessary.

Source: James 2004, Brian 2003, Holland et al.,

1999, Rosario, 2000, HEINKEN , British

Waterways, CocaCola, Philips, Alstom, ABN-

AMRO, Nestle, BMW, McDonals’s, Nike, British

Gas, Shell, Sony, Fiat

7. Competent project leader: The main reason why

this person is considered to be central to successful

implementations is that s/he has both the position

and the skills that are critical for handle

organizational change (Parr et al. 1999). The role of

the project champion is very important for marketing

the project throughout the organization (Sumner,

1999).

Source: Janet Lee, HEINKEN , British Waterways,

CocaCola, Philips, Alstom, ABN-AMRO, Nestle,

BMW, McDonals’s, Nike, British Gas, Shell, Sony,

Fiat

Change management: The change management

approach will try to ensure the acceptance and

readiness of the new system, allowing the

organization to get the benefits of its use. A

successful organizational change approach relies in a

proper integration of people, process and

technology.

Source: Psulcas 2003, Brian 2003, Janet Lee,

HEINKEN , British Waterways, CocaCola, Philips,

Alstom, ABN-AMRO, Nestle, BMW, McDonals’s,

Nike, British Gas, Shell, Sony, Fiat

Capable and committed implementation team

members from tech and business knowledge: ERP

projects typically require some combination of

business, information technology, vendor, and

consulting support. The structure of the project team

has a strong impact in the implementation process.

Thus team members should be chosen from both the

technical area and functional areas of the business so

that all the requirements are adequately specified.

Source: Charles 2003, Marc 2003, Janet Lee,

Buckhout et al., 1999; Bingi et al., 1999; Rosario,

2000; holley,2002; collett,2000, Nelson and Somers

2001

10. Proper training and education: The training plan

should take into consideration both technical staff

and end-user. This will ensure ready acceptance by

the employees and will help maintain the quality of

ERP implementation. It can be done an in-house

training approach or by using training consultants.

Source: Charles 2003, R. R. Nelson, and P. H.

Cheney,2002; C. P. Holland, and B. Light,1999,

HEINKEN , British Waterways, CocaCola, Philips,

Alstom, ABN-AMRO, Nestle, BMW, McDonals’s,

Nike, British Gas, Shell, Sony, Fiat

11.

Selection of best suited ERP package and good

consultants: Selecting appropriate ERP package and

consultants with right skills to implement the same.

Source: Marc 2003, Peter (pemeco), HEINKEN ,

British Waterways, CocaCola, Philips, Alstom,

ABN-AMRO, Nestle, BMW, McDonals’s, Nike,

British Gas, Shell, Sony, Fiat

12.

Business process re-engineering: This is related

with the alignment between business processes and

the ERP business model and related best practices.

This process will allow the improvement of the

software functionality according to the organization

needs. Managers have to decide if they do business

process reengineering before, during or after ERP

implementation.

Source: Charles 2003, Brian 2003, Falkowski et al.,

1998, Roberts and Barrar, 1992, Bingi et al., 1999,

Rosario, 2000; Holland et al., 1999, HEINKEN ,

British Waterways, CocaCola, Philips, Alstom,

ABN-AMRO, Nestle, BMW, McDonals’s, Nike,

British Gas, Shell, Sony, Fiat

13.

Knowledge transfer between consultants and

implementing team: knowledge transfer is important

because when the consultants leave the company

after implementation the team members must be able

to handle ERP, its working and any problems that

may arise during its use. This is a very important

factor for making ERP implementation successful.

Source: Marc 2003, Brian 2003, HEINKEN , British

Waterways, CocaCola, Philips, Alstom, ABN-

AMRO, Nestle, BMW, McDonals’s, Nike, British

Gas, Shell, Sony, Fiat

14.

Interdepartmental communication and

cooperation: Communication should be of two

kinds: 'inwards' the project team and 'outwards' to

the whole organization. This means not only sharing

IDENTIFICATION OF CRITICAL SUCCESS FACTORS TO ERP PROJECT MANAGEMENT - An Application of

Grey Relational Analysis and Analytic Hierarchy Process

189

information between the project team but also

communicating to the whole organization the results

and the goals in each implementation stage. Also

interdepartmental cooperation is very necessary as

implementation of ERP means integrating all the

departments and thus requires all the departments to

communicate and cooperate.

Source: Charles 2003, Peter (pemeco), HEINKEN ,

British Waterways, CocaCola, Philips, Alstom,

ABN-AMRO, Nestle, BMW, McDonals’s, Nike,

British Gas, Shell, Sony, Fiat

15. Setting realistic expectations from the software:

ERP is generic software and may not provide all the

functionalities of the organizational business

processes. Also the benefits from ERP

implementation are not realized immediately so

realistic expectation should be set, this will help in

acceptance and success of the software.

Source: Peter (pemeco), HEINKEN , British

Waterways, CocaCola, Philips, Alstom, ABN-

AMRO, Nestle, BMW, McDonals’s, Nike, British

Gas, Shell, Sony, Fiat

16.

Employing Best practices: Best practices within

that sector of the industry when used helps in a

better business process reengineering and makes

working of the organizational much more efficient.

Source: Brian 2003, HEINKEN , British Waterways,

CocaCola, Philips, Alstom, ABN-AMRO, Nestle,

BMW, McDonals’s, Nike, British Gas, Shell, Sony,

Fiat

17.

Clearly defining roles and responsibilities:

Every employee in the organization must be clearly

told his responsibilities and role in ERP

implementation. This will help in eliminating chaos

and reduction in wastage of time, effort and money.

Source: James 2004, Psulcas 2003, HEINKEN,

British Waterways, CocaCola, Philips, Alstom,

ABN-AMRO, Nestle, BMW, McDonals’s, Nike,

British Gas, Shell, Sony, Fiat

CSFs are then grouped according to the Project

Management areas taken by survey and literature

which is shown in Table 1.

Table 1: CSFs categorized into PM area groups.

PM Areas

CSF’S Affectin

Areas

Scope 1,3,4,5,15,16

Cost 6,7,9, 10,11

Time 2,3,6,7,9,14,17

Quality

1,2,3,4,5,6,8,9,11,12,1

Expectation 1,3,5,15

4 CONTRIBUTION OF EACH

CSF FOR A SUCCESSFUL ERP

IMPLEMENTATION

We have analyzed the questionnaire which is framed

by incorporating Likert scale R. Likert (1932).

Using Analytic Hierarchial Process (AHP) Saaty

(1980, 1986, 1994) we develop a AHP model

described in the Figure 1.

Figure1: AHP Model for finding CSFs contribution.

From the survey it has been observed that the

responses are conflicting in which responses among

the group members are unable to reach a consensus.

This research applies grey relational analysis J.

Deng (1982) Chien-Ho Wu (2007) to approach

group decision that determine the optimal grey

relational grade of various weights for some level in

the duplicate hierarchal structure, when some

weights belong to the grey number in AHP Chin-

Tsai L et al.,(2004).

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Finally, after resolving conflicts in responses we

get the contribution of each CSF and their Project

Management area contribution for successful ERP

implementation in Table 2 & 3.

Table 2: Individual CSFs Contribution in the Successful

Implementation of ERP Project.

Table 3: Contribution of each project management area in

the success of ERP project

5 CONCLUSIONS

ERP implementations are usually large, complex

projects, involving large groups of people and other

resources, working together under consider able time

pressure and facing many unforeseen developments.

Not surprisingly, many of these implementations

turn out to be less successful than originally

intended. So, this paper gives out the 17 critical

success factors and the project management area it

relates for a successful ERP implementation from

survey and literature. Using appropriate quantitative

techniques the responses has been evaluated and

finally gets the contribution of each CSF in an ERP

project.

ACKNOWLEDGEMENTS

Dr. Sujit Kumar Senapati made a substantial

contribution to bringing up the whole idea of this

article, and we are most grateful to him for that. In

addition, we would like to thank two anonymous

referees for valuable comments on a previous

version of this paper.

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S. No Critical Success Factors

Contribution

(%)

Top management

commitment.

9.865

Employee support and

involvement.

2.877

Clearly defined goals,

objectives and scope of

implementation.

8.236

Proper balance of IT and

Business Emphasis

4.761

5. Adequate Project Planning 3.221

Project monitoring at every

stage.

21.78

7. Competent project leader. 13.31

8. Change management. 0.731

Capable and committed

implementation team members

from tech and business

knowledge.

7.974

10 Proper training and education. 4.34

Selection of best suited ERP

package and good consultants.

4.11

Business process re-

engineering.

2.016

Knowledge transfer between

consultants and implementing

team.

2.142

Interdepartmental

communication and

cooperation.

2.761

Setting realistic expectations

from the software.

5.686

16 Employing Best practices. 1.007

Clearly defining roles and

responsibilities.

5.127

Sum 100

scope 14.60%

cost 21.56%

time 38.47%

quality 16.37%

expectation 8.99%

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Grey Relational Analysis and Analytic Hierarchy Process

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