IMPORTANT FACTORS IN ERP SYSTEMS

IMPLEMENTATIONS

Result of the research in Polish enterprises

Piotr Soja

Department of Computer Science, Cracow University of Economics, Rakowicka 27, 31–510 Kraków, Poland

Keywords: ERP systems, implementation, success factors

Abs

tract: In the article the problem of success factors in ERP systems implementations has been discussed. The

review of the literature concerning success factors has been discussed and the collection of potential ERP

implementation success factors was identified. Next, the result of research has been presented, where

respondents have been asked about their opinion about the importance of subsequent factors for the

implementation success. There were two groups of respondents: the first consisted of people from Polish

enterprises implementing ERP systems and the second comprised experts working in ERP systems

suppliers. On the basis of the research, the most important and necessary factors in the respondents’

opinions have been identified, as well as the least important ones.

1 INTRODUCTION

Enterprises operate in a market where fast reaction,

flexibility and fulfilling the individual needs of a

customer are the common rules. In order to cope

with increasing competition the enterprises have to

act in a planned manner by carefully selecting and

working out their corporate strategies. In order to

achieve assumed strategic goals and follow the

difficult route, enterprises have to enhance and

reorganise their functioning rules. The enterprises’

needs are met by information technology

functionality, which offers integrated systems to

support the enterprise management.

The most advanced group o

integrated systems

are the ERP class systems which became well

known in Poland in the nineties. The ERP systems

include mechanisms based on planning and

forecasting which support the management of the

entire enterprise and integrate all areas of its

functioning. The effective implementation of such a

system can bring about many benefits, starting from

the most general such as enterprise management and

information flow enhancement. Consequently,

economic indicators’ improvement can be

accomplished which finally leads to enterprise

profitability increase.

However, the achievement of these mentioned

nefits depends upon the effective implementation

of the ERP system within its full functionality. An

examination of the Polish ERP market shows that

this is quite difficult. The implementation of an ERP

system is a process lasting as long as 2 or 3 years

and strongly involving enterprise resources. This in

turn causes great expenses on the system and

implementation services. The situation of ERP

implementation market is not good because the vast

majority of implementation projects do not bring

about planned effects or even end up in project

abandonment. The implementation projects’

duration time and budget significantly extend

estimated amounts and the planned scope of the

implementation is limited, often reduced only to

inventory management support.

Due to this situation, it seems to be very

cessary to conduct research in order to reveal the

mechanisms determining the success of

implementation projects. There is a need to perform

analysis towards the identification of potential ERP

implementation success factors. The next step is the

verification of findings with the help of real

implementation project participants. In the next

stage of research, the group of factors that are the

most important for the implementation success

should be formulated.

Soja P. (2004).

IMPORTANT FACTORS IN ERP SYSTEMS IMPLEMENTATIONS - Result of the research in Polish enterprises.

In Proceedings of the Sixth International Conference on Enterprise Information Systems, pages 84-90

DOI: 10.5220/0002596900840090

 SciTePress

2 THE IDENTIFICATION OF ERP

IMPLEMENTATION SUCCESS

FACTORS

2.1 The overview of the research on

ERP implementation success

factors

The ERP system implementation is a process of

great complexity, involving crucial resources of the

enterprise. There are great many conditions and

factors potentially influencing the ERP

implementation. Their occurrence could have

positive effect on the outcome of ERP project, while

their absence could generate problems during

implementation. The results of some researches on

ERP implementation success factors have been

described below.

Burns, Turnipseed and Riggs (1991) doing

research on critical success factors in MRP

implementation suggested the division of potential

factors to environmental and methodological. The

environmental factors include, apart from those

describing enterprise activity (organisation size,

organisation function and production process), the

product technology level and the organisation’s

willingness to change. The methodological factors

are connected with incorporated implementation

approach and contain aspects related to

implementation team, project manager and

consultants involvement, implementation plan

existence, integration level of introduced solution,

the source of the software, extent of hardware

modification, the previous systems’ environment

and the extent of organisational modification

required. On the basis of 504 responses on a mail

survey, most of the methodological factors were

identified as being associated with MRP II success,

while only two of environmental factors were found

to be connected with implementation success. They

were product technology and organisation

willingness to change.

In other research, the purpose of which was the

identification of necessary factors for successful

implementation of ERP systems, Parr, Shanks and

Darke (1999) turned to experts participating in many

implementation projects. The research sample

consisted of 10 experts who had participated in a

total of 42 ERP implementation projects mainly as

project managers. The experts were interviewed in

order to understand ERP systems implementation in

practice and to elicit experienced practitioners’

beliefs about factors that lead to successful

implementation. Based on the interviews, 10

candidate necessary factors for successful

implementation of ERP systems are identified. They

were divided into the groups related with

management, personnel, software and project. Of

these 10 candidate factors, three are of paramount

importance. They are management support of the

project team and of the implementation process, a

project team that has the appropriate balance of

business and technical skills, and commitment to the

change by all stakeholders.

Holland, Light and Gibson (1999) presented a

number of potential success factors in ERP

implementation and suggested their division into

strategic and tactical factors. The model was only

illustrated on the sample of 5 implementation

projects. Furthermore, the authors did not formulate

conclusions regarding factors’ importance and their

ranking.

Esteves and Pastor (2000) suggested a unified

ERP implementation critical success factors model.

This model is based on the analysis of considerable

research regarding implementation success factors.

The authors indicated that factors should be

categorised in strategic and tactical factors from

organisational and technological perspectives.

2.2 The general model of ERP

implementation success factors

The results of above mentioned research on ERP

implementation success factors illustrate the

problem complexity and the variety of approaches.

The potential success factors and the research’s

results differ substantially from each other. Except

for general agreement regarding the necessity of

management support for implementation works, it is

rather difficult to compare achieved research’s

outcomes. This difficulty is deepened by the

difference in research samples, which ranged from

hundreds of manufacturing enterprises, through a

group of experts up to a set of only 5

implementation cases.

Taking into account the results of mentioned

research, literature studies (among others Fui–Hoon

Nah et al. 2001; Ip and Yam 1998; Parr et al. 1999;

Skok and Legge 2001; Stewart et al. 2000) and the

experience in business environment, the general

model of ERP implementation success factors has

been proposed. During creation of the model

attention was paid to the organisational aspect of the

implementation. It was assumed that the ready–to–

use ERP software package, purchased from an

external supplier, is being implemented. Hence, the

problems regarding ERP software creation process

were not discussed.

IMPORTANT FACTORS IN ERP SYSTEMS IMPLEMENTATIONS: result of the research in Polish enterprises

Table 1: The general model of ERP implementation success factors

Factor Factor description

Related to the implementation participants

A project manager The project manager is the person from the enterprise who sacrifices most of his working time to

implementation duties

B team composition The implementation team consists of various people having high qualifications and knowledge

about the enterprise

C team involvement The project manager and members of the implementation team are strongly involved in the

implementation duties

D motivation system There is a motivation system rewarding participation in implementation and on-time task

delivery

E co-operation with

supplier

Good co-operation with the system supplier who is competent and offers high level of services

Related to the top management involvement

F top management

support

The top management support for the project and the management members involvement in

implementation duties

G top management

awareness

Top management awareness regarding the project goals and complexity, demanded labour,

existing limitations, required capital investment and project inevitability

H top management

participation

Top management participation in the project schedule and goals definition

Related to the project definition and organisation

I linking with strategy The implementation project linking with enterprise strategy (implementation as a method of the

enterprise strategic goals achievement)

J implementation goals The definition of implementation goals – defined in the economic terms at the whole enterprise

level

K detailed schedule The definition of detailed implementation scope, plan and schedule with responsibility allocation

L pre-implementation

analysis

The enterprise analysis and diagnosis prior to the start of implementation, and the creation of the

enterprise functioning model with the integrated system support

M organisation change The change in the enterprise organisation and its business processes

N monitoring and

feedback

The implementation monitoring and feedback – information exchange between the project team

and end users

O implementation

promotion

The implementation promotion – the information broadcasting about the project by the

implementation team members to other enterprise employees

P fast effects The visible fast partial positive results of the implementation

Q appropriate training The adequate training program suitable to the enterprise needs

Related to the project status

R investment plan The formal introduction of the implementation project in the enterprise investment plan

S project team

empowerment

The project team members empowerment to decision making and their high position in the

enterprise hierarchy

T financial budget The financial resources assured for during the implementation

U work time schedule The work time assured for the implementation team members (work time schedule)

V IT infrastructure The appropriate IT infrastructure assured for the implementation project

Related to information systems

W system reliability The ERP system reliability, its user friendliness and fit to the enterprise needs

X minimal

customisation

The system minimal customisation – the use of defined patterns and solutions embedded in the

system

Y legacy systems The legacy systems adaptation for the operation in the ERP integrated system environment

Z implementation

experience

The project team members experience gained during former information systems

implementation

Similarly, the problems specific only to

manufacturing enterprises (concerned for instance

with manufacturing process or bill of material

complexity) were not taken into consideration

because of the more general goal of the research and

the attempt to cover the broader range of enterprises

dealing not only with manufacturing.

The proposed ERP implementation success

factors, exposed in Table 1, are divided to the groups

regarding their broader aspect and in order to ease

ICEIS 2004 - DATABASES AND INFORMATION SYSTEMS INTEGRATION

the presentation. The separated groups consist of

factors related to implementation participants, top

management involvement, project definition and

organisation, project status and information systems.

3 RESEARCH SAMPLE

CHARACTERISTIC

The ERP system implementation success factors

research was conducted twofold: firstly from the

viewpoint of enterprises which had decided on ERP

system implementation, and secondly from the

perspective of ERP systems and services suppliers.

In the first case, the research sample consisted of

Polish enterprises implementing the ERP system in

their organisations. In the second case, the research

sample comprised the consultants and experts

representing various suppliers of ERP systems.

The research done on the enterprises

implementing the ERP system into their

organisations was conducted with the use of a

questionnaire, which was directed to the people

playing leading roles in the implementation (the

project leader if it was possible). 223 enterprises

were contacted during the research and 68 (30%)

answers were obtained from enterprises representing

the whole country and various industries.

In order to examine the experts’ opinions, the

research questionnaire was directed to the specialists

with the experience of implementing various ERP

systems – those who were leading implementation

projects from the supplier perspective and taking

part in many implementations. During the research

45 people were inquired of and in the end 31 (69%)

experts’ opinions were gathered. The experts

represented 22 firms supplying ERP systems and

implementation services.

3.1 The arrangement of data

The analysis of data from respondents from

enterprises is being performed in three perspectives.

Among the criteria defining division into

perspectives are enterprise size, implementation

scope and implementation duration. The analysis’

perspectives are named: SIZE, SCOPE and TIME.

The criterion defining enterprise size was the

number of employees. For the needs of analysis,

enterprises have been divided into a group of small

and large companies. The small firms comprised the

enterprises employing less than 300 people. The rest

of the companies formed the group of large

enterprises. As a result of that division the group of

small firms counted 29 companies, and the group of

large firms consisted of 39 companies.

The division regarding implementation scope

was made by taking into consideration the modules

of implemented ERP system. The following modules

were taken into consideration: Finance, Purchasing,

Inventory, Sales, Shop Floor Control and MRP

Explosion. The full scope implementations were

defined as the projects where the modules Shop

Floor Control and MRP Explosion were

implemented and also satisfying the condition that at

least 4 modules were introduced. Given such

definition, the group of full scope implementations

comprised 31 projects, while the rest of the projects

(37) created the group of partial implementations.

In the division considering project duration time,

short implementations were defined as projects

lasting up to one year, and those lasting more than

one year were marked as long implementations. The

group of short implementations comprised 33

enterprises; similarly 33 projects were recognised as

long implementations. 2 projects were not finished

when the research was conducted.

4 THE ANALYSIS OF FACTORS

IMPORTANCE

4.1 Data from enterprises

The respondents from enterprises expressed their

opinions about the importance of listed factors in the

implementation process. They were asked to use the

scale from 0 to 5, where 0 stood for no importance at

all and 5 meant the highest importance. The factors

were marked with a subsequent letter of the alphabet

from A to Z, and they were divided into groups.

In order to illustrate the respondents’ opinions

regarding the importance of proposed factors, an

average was calculated for each factor. These

calculations have been made for all researched

enterprises as well as for defined groups using

mentioned criteria (i.e. SIZE, SCOPE and TIME).

The calculation effect is visible in Table 3. The

average importance is located in column Avg and

column Rank contains the rank obtained by the

factor within a specific group on the basis of

decreasing average importance calculated within a

given group.

The Spearman rank correlation coefficients (r

)

were calculated in order to explore the relationship

between the factors’ ranks in defined groups. The

values of r

coefficients are placed in Table 2. The

value of r

ranges from –1 to 1, and a value of –1 or

IMPORTANT FACTORS IN ERP SYSTEMS IMPLEMENTATIONS: result of the research in Polish enterprises

1 indicates perfect association between ranks, the

plus sign occurring for identical rankings and the

minus sign occurring for reverse rankings (see

Walpole et al. 1998, p.630). The r

coefficients were

calculated for pairs of separated groups created by

the analysis perspectives.

Considering responses from all inquired

enterprises, the respondents on average recognised

factor B – team composition (with average 4,6) as

the most important element. The following positions

were taken by factors: E – co-operation with

supplier, G – top management awareness, W –

system reliability, C – team involvement, V – IT

infrastructure and K – detailed schedule.

As, on average, the least important factors

respondents considered Y – legacy systems (with

average 3,17), P – fast effects, X – minimal

customisation, O – implementation promotion and H

– top management participation.

Examining the SIZE perspective, it could be

noted that r

coefficient for complementary groups

of small and large enterprises reached high value of

0,90. Judging from this value, one can say that

regardless the enterprise’s size, respondents are

unanimous in factors’ ranking regarding their

importance for the project success.

Studying the SCOPE perspective, it could be

observed that r

coefficient for the projects with full

scope of implementation and the projects with

partial functionality being introduced reached quite

high value of 0,84. This value allows us to claim that

regardless of the implementation scope respondents

are quite unanimous in factors’ ranking concerning

their importance for the project.

Analysing the TIME perspective, it could be

noted that the value of r

coefficient for

complementary groups of long and short projects

was equal to 0,89. On the base of this high value of

, one can say that regardless of the project duration

time, respondents are unanimous in factors’ ranking

regarding their importance for the project.

The conclusion from the analysis of r

coefficients is that respondents are unanimous in the

judgement of factors importance for the project

outcome, regardless of established division into

groups.

4.2 Data from experts

Similarly to respondents from enterprises, the

experts expressed their opinions regarding the

importance of suggested factors in the

implementations process. Additionally, they were

asked to mark the factors whose occurrence, in their

opinion, is necessary for the project success.

The experts, on average, considered factor F –

top management support (with average 4,65) as the

most important element for the project. The

following positions were taken by factors: A –

project manager, T – financial budget, B – team

composition

, K – detailed schedule, S – project team

empowerment and

U – work time schedule (see

Table 3, column Importance / Avg).

As the least important factors for the

implementation projects, the experts considered X –

minimal customisation (with average 2,04), Y –

legacy systems, D – motivation system, M –

organisational change and H – top management

participation.

The experts’ answers to the question of what

factors’ occurrences during the project are necessary

for the implementation success are presented in

Table 3, column Necessity / Number. Most experts

regarded factor A – project manager (23 answers) as

the most necessary. The further positions were

occupied by factors: K –

detailed schedule, B – team

composition

, T – financial budget, F – top

management support

, S – project team

empowerment

and C – team involvement.

It is worth noting that none of the experts

recognised factor X – minimal customisation as a

necessary element in the project, and that factors P –

fast effects and Y – legacy systems received only one

positive answer.

4.3 Opinions from enterprises vs.

experts’ beliefs

In order to compare the opinions of the respondents

from enterprises with the experts’ beliefs, the

Spearman ranks correlation coefficient r

was

calculated for the ranks obtained in the all

enterprises group and in the set of experts. The value

of r

coefficient is equal to 0,77, which suggests

quite a strong relationship between ranks in the two

examined groups.

Table 2: Spearman r

coefficients for pairs of projects

groups

Complementary groups projects r

Small – Large 0,90

Full scope – Partial scope 0,84

Short – Long 0,89

ICEIS 2004 - DATABASES AND INFORMATION SYSTEMS INTEGRATION

Table 3: The factors’ importance in the opinions of respondents

Respondents from enterprises Experts

Enterprise SIZE

Implementation

SCOPE

Duration TIME

All

Small Large Full Partial Short Long

Importance Necessity

Factor

Rank

Avg

Rank

Avg

Rank

Avg

Rank

Avg

Rank

Avg

Rank

Avg

Rank

Avg

Rank

Avg

Rank

Number

A 12 4,23 13 4,07 13 4,34 10 4,37 13 4,11 9 4,33 15 4,06 2 4,61 1 23

B 1 4,60 3 4,45 1 4,72 1 4,68 3 4,54 1 4,64 2 4,61 4 4,58 3 20

C 5 4,46 5 4,36 8 4,53 2 4,58 8 4,37 3 4,52 8 4,38 8 4,35 7 17

D 21 3,77 20 3,68 21 3,84 21 3,87 21 3,69 21 3,73 22 3,77 24 3,06 20 4

E 2 4,54 4 4,38 2 4,66 12 4,30 1 4,73 4 4,47 3 4,61 11 4,14 9 16

F 8 4,40 10 4,21 5 4,54 11 4,35 6 4,43 12 4,21 5 4,55 1 4,65 5 18

G 3 4,51 2 4,45 4 4,56 3 4,58 5 4,46 6 4,42 4 4,61 10 4,26 10 14

H 22 3,66 22 3,45 22 3,82 24 3,68 22 3,65 23 3,45 20 3,85 22 3,26 17 6

I 17 4,00 19 3,76 15 4,18 16 4,13 17 3,89 15 4,03 19 3,97 13 3,97 13 9

J 19 3,90 21 3,61 16 4,10 18 4,10 20 3,72 19 3,79 18 4,00 14 3,90 16 7

K 7 4,44 7 4,31 6 4,54 4 4,58 9 4,32 5 4,45 7 4,39 5 4,55 2 21

L 15 4,09 12 4,17 18 4,03 14 4,19 15 4,00 14 4,09 14 4,12 12 4,00 12 11

M 20 3,84 18 3,80 20 3,88 20 3,92 19 3,79 20 3,77 21 3,85 23 3,08 23 2

N 11 4,31 9 4,24 12 4,35 7 4,50 11 4,17 10 4,32 13 4,23 15 3,88 14 9

O 23 3,54 24 3,40 23 3,65 23 3,71 23 3,43 22 3,55 25 3,58 21 3,27 22 3

P 25 3,31 25 3,11 26 3,46 25 3,35 26 3,28 25 3,22 26 3,45 20 3,32 24 1

Q 16 4,02 16 3,92 17 4,09 15 4,16 16 3,91 16 4,00 16 4,04 17 3,54 21 4

R 14 4,13 14 3,93 14 4,28 17 4,10 12 4,16 17 3,94 12 4,27 18 3,35 15 8

S 10 4,40 11 4,21 7 4,54 8 4,42 7 4,38 8 4,39 9 4,36 6 4,42 6 18

T 9 4,40 8 4,24 9 4,51 5 4,55 10 4,27 11 4,30 6 4,48 3 4,61 4 20

U 13 4,22 15 3,93 10 4,44 9 4,42 14 4,05 13 4,15 11 4,27 7 4,39 8 17

V 6 4,46 1 4,48 11 4,44 13 4,26 2 4,62 2 4,61 10 4,30 9 4,29 11 14

W 4 4,51 6 4,36 3 4,62 6 4,54 4 4,49 7 4,42 1 4,65 16 3,56 18 6

X 24 3,48 23 3,42 25 3,53 22 3,74 24 3,31 24 3,42 24 3,58 26 2,04 26 0

Y 26 3,17 26 2,67 24 3,57 26 2,95 25 3,31 26 2,87 23 3,64 25 2,29 25 1

Z 18 3,93 17 3,88 19 3,97 19 4,08 18 3,83 18 3,81 17 4,04 19 3,35 19 5

Both groups of respondents, those from

enterprises and experts, recognise balanced team

composition, definition of detailed implementation

schedule and implementation team involvement as

the most important and necessary factors for

implementation project successfulness. Additionally,

respondents from enterprises indicate good co-

operation with supplier and top management

awareness to be of paramount importance. On the

other hand, the experts suggest project manager

presence, financial budget, top management support

and project team empowerment as the very

important and necessary factors for project

prosperity.

Experts underestimate factor W – system

reliability. They perceive this factor as not important

(rank 16) and not necessary (rank 18) element for

project successfulness. On the other hand,

respondents from enterprises treat system reliability

as one of the most important factors for project

successfulness.

The respondents from enterprises and experts

unanimously indicate the least important and

unnecessary factors for implementation project

success. They are legacy systems adaptation, ERP

system minimal customisation, visible fast partial

positive effects, implementation promotion, top

management participation and the existence of

motivation system.

5 SUMMARY

The general conclusion which can be drawn from

the research is that people participating in an

implementation project are most important for

project successfulness. There are three factors

related to project participants among the most

important factors indicated by respondents. These

factors are: B – team composition, E – co-operation

with supplier and C – team involvement.

IMPORTANT FACTORS IN ERP SYSTEMS IMPLEMENTATIONS: result of the research in Polish enterprises

Apart from project participants, respondents

recognise also the importance of correctly

functioning ERP system and whole IT infrastructure.

Respondents from enterprises indicate system

reliability as one of the most important factors.

Moreover, factor V – IT infrastructure reached very

high rank for projects in small enterprises, for

projects with partial functionality being introduced

and also for projects with short duration time.

Hence, one can say that IT infrastructure is

especially important for small implementation

projects.

The presented results of the research should be

useful for the professionals who are leading

implementation projects and those making decisions

for the first time on ERP system implementation in a

particular enterprise. The awareness of the aspects

regarding the factors importance could have a

positive effect on decisions made during such a

complicated endeavour like ERP system

implementation. The author hopes that the

conclusions drawn in this paper will be interesting

for people professionally dealing with ERP

implementations and will at the very least be an

inspiration for project enhancement.

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