CRITICAL SUCCESS FACTORS IN ERP PROJECTS

Case studies in two industrial organizations in the Netherlands

Jos J.M. Trienekens

Eindhoven University of Technology, Den Dolech 2, Eindhoven, The Netherlands,

Wouter Kuijpers

ACA International, Hurksestraat 31, Eindhoven The Netherlands

Ruud Hendriks

Oce, Solinger strasse 5-7, Mülheim a/d Ruhr, Germany

Key words: ERP system implementation, success factors, case studies

Abstract: Over the past decade many organizations are increasingly

concerned with the implementation of Enterprise

Resource Planning (ERP) systems. Implementation can be considered to be a process of organizational

change influenced by different factors of type organizational, technological and human. This paper reports

on critical success factors (CSFs) in two actual ERP implementation projects in industry. Critical success

factors are being recognized and used in these projects and serve as a reference base for monitoring and

controling the implementation projects. The paper identifies both (dis)advantages of CSFs and shortcomings

of ERP implementation project management.

1 INTRODUCTION

Over the past decade a new class of software

applications has emerged: ERP systems. These

software packages seek to integrate the complete

range of a business’s processes and data

communication patterns on the basis of one single

information and IT architecture (Klaus et al, 2000).

Quality control and assurance during the

plementation of ERP packaged software has been

under-researched, in particular regarding the

identification, definition and validation of critical

success factors (Krumbholz et al, 2001), (Marble,

2003). These factors can be of different types, such

as organizational (e.g. top management support),

human (e.g. communication attitude, user

resistance), technical (e.g. business process

modeling methods and tools), (Stelzer et al, 1998),

(Trienekens et al, 2001). Although some articles

look at factors that drive success in ERP

implementation, they look at them from different

perspectives and also with different definitions of

“success factors” in mind (Aladwani, 2001),

(Amoako-Gyampa et al, 2003). Over the past years

several research papers have emerged that strive at

the identification and classification of CSFs (Hoon

Nah et al, 2001). More recently research papers have

emerged that focus on the evaluation and validation

of the CFSs relevance in practice, e.g. the CFSs

relevance along the different ERP implementation

project phases (Esteves et al, 2004). This paper takes

the latter research direction and reports on two ERP

implementation case studies in that CSFs are being

recognized and used.

In section 2 a set of 11 success factors for ERP

plementation is introduced. This set of success

factors is presented in (Hoon Nah et al, 2001) and

has been derived from 10 relevant articles, on the

basis of a well-structured computer search of

databases of published works and conference

proceedings in the information systems area. Each of

the 11 success factors is described in terms of sub-

CSFs and their aspects. In section 3 the results of the

discussion sessions with the project management of

the two distinct ERP projects are presented and

discussed. Section 4 finalises the paper with

conclusions and recommendations, and points to

further work to be done.

J.M. Trienekens J., Kuijpers W. and Hendriks R. (2005).

CRITICAL SUCCESS FACTORS IN ERP PROJECTS Case studies in two industrial organizations in the Netherlands.

In Proceedings of the Seventh International Conference on Enterprise Information Systems, pages 84-91

DOI: 10.5220/0002546400840091

 SciTePress

2 RESEARCH FRAMEWORK AND

APPROACH

A total of 11 critical success factors for ERP

implementation have been identified, based on a

review of the ERP literature (Hoon Nah et al, 2001).

These 11 factors were obtained after careful analysis

and grouping of related sub-factors. To classify the

CSFs identified a process theory approach was used

that focuses on the sequence of events leading up to

implementation completion (Markus et al, 2000).

This sequence consists of our phases in an ERP life

cycle, respectively chartering (decisions defining the

business case), project (getting system and end users

up and running), shakedown (stabilizing, eliminating

‘bugs’, getting to normal operations), onward and

upward (maintaining systems, supporting users,

getting results, upgrading, system extensions). These

phases are in line with the stages of the traditional

systems development life cycle. The eleven CSFs

are respectively:

1. ERP teamwork and composition

2. Top management support

3. Business plan and vision

4. Effective communication

5. Project management

6. Project champion

7. Appropriate business and legacy systems

8. Change management program and culture

9. Business process reengineering (BPR) and

minimum customization

10. Software development, testing and

troubleshooting

11. Monitoring and evaluation of performance

In section 3 each of the CSFs will be highlighted on

the basis of their so-called key aspects, as identified

in literature (Hoon Nah, 2001). Consequently the

way they are recognized in two case studies in

practice wil be reported as well as their

shortcomings and advantages.

The approach that has been followed in our research

consists of four main steps (Hendriks et al, 2004):

• Selecting two appropriate ERP

implementation projects in industrial

domains.

• Collecting relevant project documentation

on these selected projects (in particular the

project plans).

• Discussing and analysing the relevant

project documentation and the project

experiences with the ERP project

management, on the basis of structured

questionnaires that are derived from the

unified CSF models from literature.

• Summarizing lessons learned from

practitioners regarding the usage of success

factors in ERP implementation projects.

The two main research questions that formed a basis

for a structured questionnaire, to be used in the

discussion sessions with ERP implementation

project managers, are respectively:

1. Can CSFs be recognized in ERP

implementation projects in practice? What

are shortcomings and what are

opportunities?

2. Can CSFs really be used as management

instrument to support project managers

with monitoring and controlling the ERP

project? What are shortcomings and what

are opportunities?

A structured questionnaire starting from these

two research questions and making use of the

literature on the identification and classification of

CSFs has been applied in structured in-depth

discussion sessions with the project management of

the two selected ERP implementation projects.

3 DISCUSSING CSF: CASE STUDY

RESULTS

In this section the results of the two case studies on

ERP implementation are presented. In the following

we will first introduce in section 3.1 briefly the two

case study environments. Subsequently we will

present in section 3.2 the results of the discussion

sessions regarding each of the CSFs.

3.1 Case study characteristics

Case study 1: ERP implementation at OCE The

Netherlands

Océ is a global market leader in systems for the

production and management of technical

documentation packages. This includes hardware,

software and services that help customers move

from analogue to digital and subsequently to colour

and web-based document operations. The ERP

project will have a major impact on the sales and

service processes in the sales units of OCE.

Functional business areas that are currently involved

are respectively Finance & Accounting and Sales.

The project is currently in its ‘project’ phase (see

section 2). More than 250 employees will make use

of the ERP implementation. The project budget

exceeds E500.000,-. Main objectives are the

streamlining of the heterogenic sales and service

processes and the reduction of IT costs.

CRITICAL SUCCESS FACTORS IN ERP PROJECTS: Case studies in two industrial organizations in the netherlands

Case study 2: ERP implementation at Bosch VDT.

Van Doorne’s Transmissie (VDT) in The

Netherlands is part of the Robert Bosch GmbH

concern. VDT in Tilburg The Netherlands produces

the so-called ‘steel push’, an important component

of the Continuously Variable Transmission (CVT),

which is increasingly being used in a variety of CVT

applications in the automotive industry. Also in this

organization more then 250 employees will make

use of the ERP implementation.

At VDT an ERP package is currently being

implemented in the functional areas Finance &

Accounting, Warehouse, Technical support. Project

documents covering the implementation have been

evaluated on the basis of identified success factors

from literature. The project is partly in its ‘project

phase’ and partly in its ‘shakedown phase’ (see

section 2). The project budget exceeds E500.000,-.

Main objective of the project is a replacement of the

outdated and cost-ineffective current system.

3.2 Results of the discussion sessions

on CSFs

In this section the main results will be presented of

the discussion sessions on the CSFs with the project

managers (Hoon Nah et al, 2001).

CSF-1: ERP Teamwork and Composition

The CSF teamwork and composition is described

in terms of respectively:

• Best people in the organization, which

is reflected by experience, educational

level and performance track record.

• Cross-functional composition of the

team; team members should come form

distinct functional areas of the

organization so that implementation

problems can be discussed from

different angles.

• The mix of consultants and internal staff

so that the internal staff can develop the

necessary technical skills for design and

implementation.

• The priority of the ERP implementation

project for a project manager should

preferably be the top and only priority

and team members need to be assigned

fully to the implementation.

• The team should be co-located together

at an assigned location to falicitate

collaboration.

• Incentives should be given for

successfully implementing the system

on time and within the assigned budget.

• Sharing of information within company

is vital.

Table 1: Results regarding ERP Teamwork and

Composition

CSF: ERP

teamwork and

composition

OCE VDT

best people in the

organization

team members

have both

process and

system

knowledge

team members

have both

system and

process

knowledge

cross-functional

team

coming from

different

functional areas

coming from

different

functional areas

mix of consultants

and internal staff

both external

consultants and

internal staff

both external

consultants and

internal staff

information sharing formally

organized

not formally

organized

top and only

prioirty of ERP

implementation

high priority,

full-time work

average

priority, no full-

time work

incentives for

succesful

implementation

no incentives

for team

members

no incentives

for team

members

location for

working together

more than one

dedicated

location for

team work

one dedicated

location for

team-work

Table 1 shows that both projects have similar

teamwork characteristics. The project leader at VDT

has besides his tasks as project manager also tasks as

a manager at the tactical level in one of the VDT

business functions. Surprisingly both organizations

don’t make use of incentives for their employees,

although this was stressed as a very important factor

in previous research (Hoon Nah et al, 2001).

CSF-2: Top Management Support

Sub-CSFs that are recognized in literature are

respectively:

• Approval of project by top

management; publicly and explicitly

identifying the project as a top priority;

tying management bonuses to project

success.

• The implementation project is aligned

with business goals.

• Conflict handling; management has a

mediate function between the different

parties.

• Allocation of valuable resources to the

project.

ICEIS 2005 - DATABASES AND INFORMATION SYSTEMS INTEGRATION

Table 2: Results regarding Top Management Support

CSF: Top

management

support

OCE VDT

Project approval

by top

management

top management

personally

involved in

implementation

project (BU

managers are

member of the

steering group.

CEO is chairman

of the reference

board). No

management

bonuses.

no personally

involvement of

top

management. no

management

bonuses.

Alignment with

business goals

shared vision of

the organization

and the role of the

new system

no explicit

shared vision,

Conflict

handling

conflicts during

implementation

via formal

escalation

procedures

no explicit

formal conflict

handling

procedures

Allocation of

valuable

resources

big project team

with high

experienced team

members; enough

time

experienced

team members,

however: not

enough time

Quite opposite from the situation at OCE the

implementation project at VDT clearly lacks top

management support. All sub-CSFs scored negative

in the latter ERP implementation project.

CSF-3: Business Plan and Vision

Regarding this CSF the following sub-

characteristics are mentioned, respectively:

• Steering the direction of the project on

the basis of a business plan.

• Project mission related to business

goals.

• Justification for investment based on an

explicitly defined business problem.

• Usage of a clear business model of how

the organization should operate after

behind the implementation effort.

Table 3: Results regarding Business Plan and Vision

CSF: Business

plan and vision

OCE VDT

Steering the

direction of the

project

steering is

explicitly

specified,

controlled and

monitored

steering is

explicitly

specified but not

controlled and

monitored

Project mission

related to

business goals;

justification for

investment

clear link no link between

project and

business plan

Usage of a

clear business

model

specification of

how business

should operate

after

implementation

specification of

how business

should operate

after

implementation

The VDT project shows that it is not explictly

integrated in an overall business plan. There isn’t an

active control function at the higher management

level.

CSF-4: Effective Communication

Effective communication is, according to previous

research results, critical to ERP implementation.

Important aspects of communication are

respectively:

• Management of expectations, management

of user input.

• Content of cummunication, e.g. towards

user organizations: promotion of project

teams, project progress; towards team

members: importance, scope, objectives,

activities of the project.

Table 4: Results regarding Effective Communication

CSF: Effective

communication

OCE VDT

Management of

user input

none none

Content of

communication

one-way

publication of

project

progress;

intensive

communication

with team

members

informal

information on

project

progress;

informal

communication

with team

members

The table shows that both projects don’t match the

sub-CSFs regarding effective communication. VDT

is clearly more informally organized from this

perspective then OCE.

CRITICAL SUCCESS FACTORS IN ERP PROJECTS: Case studies in two industrial organizations in the netherlands

CSF-5: Project Management

Important aspects regarding Project Management

which are mentioned in (Amoako-Gyampah, 2003)

are respectively:

• Clearly defined and limited scope, e.g.

amount of systems implemented,

involvement of business units, and needed

amount of business processes to be

reengineerde.

• Formally defined milestones in order to

manage timely decisions and timeliness of

the project.

• Coordinated training facilitated by an active

human resource department; application of

conflict escalation procedures.

• Measuring success early, a focus on results

and constant tracking of schedules and

budgets against targets are important.

Table 5: Results regarding Project Management

CSF: Project

Management

OCE VDT

Clearly defined

and limited

scope

defined, but nor

formally and

measurable;

dynamic

management of

changes

defined, but

not formally;

management of

changes

Formally

defined

milestones

formally

specified

formally

specified

Conflict

escalation

procedures

formally

arranged

none

Early project

success

measurement

milestone

measurement of

progress and

budget

none

Project management is elaborated at OCE much

more then at VDT. Most of the sub-CSFs from

literature were recognized, excluding the subCSF

‘Coordinated training and active human resource

department’. Surprisingly both projects don’t have to

maintain clear links with this type of department.

CSF-6: Project Champion

Important sub-CSFs are respectively ‘High level

executive sponsorship’ and ‘Continuous conflict

management’. A business leader should be in

charge in orde to have a business perspective in the

project.

Table 6: Results regarding Project Champion

CSF: Project

Champion

OCE VDT

Project

champion

control by

executive

sponsorship

project

leader

formally

managed by

steering

group

no direct

influence of

higher

management on

project leader

Continuous

conflict

management

explicit task

of project

leader to

manage

conflicts

difficult position

of project leader

due to other

operational tasks

then ERP

implementation

The table shows that the sub-CSFs are recognized in

both organizations. At VDT the situation regarding

conflict handling is difficult because the project

manager represents different stake-holders: on the

one hand the ERP implementation in the overall

value chain of the business, and on the other hand

the operational management of a particular business

function.

CSF-7: Appropriate Business and Legacy

Systems

A stable and successful business setting is necessary

for successful ERP implementation. Business and IT

systems involving existing business processes,

organization structure, culture, and information

technology affect success. It determines the IT and

organizational change required for success (Hoon

Nah et al, 2001).

Table 7: Results regarding Appropriate Business and

Legacy Systems

CSF:

Appropriate

business and

legacy systems

OCE VDT

stable and

successful

business setting

intuitively yes;

however could

not be

determined in a

measurable

way

intuitively yes;

however could

not be

determined in a

measurable

way

In both organizations it appeared to be difficult to

discuss and determine in an objective, measurable

way whether the business setting is stable and

succesful enough for starting up an ERP

implementation project. Although intuitive opinions

of managemers point in the direction of a stable and

successful situation, too many subjective factors are

ICEIS 2005 - DATABASES AND INFORMATION SYSTEMS INTEGRATION

playing a role for explicit and formal statement to

this CSF.

CSF-8 Change Management and Culture

The CSF Change Management and Culture covers a

wide range of cultural and business change aspects.

On the one hand subjective and qualitative subjects

are addressed, such as shared values and common

aims, corporate identity, strong willingness to accept

new technology (Wohlin et al, 2001). On the other

hand also quantitative tangible aspects are covered

such as the existence of a change management

program, team member training, user training and

the involvement of users in the implementation

project.

Table 8: Results regarding Change Management and

Culture

CSF: Change

Management and

Culture

OCE VDT

Change

management

program

yes no

User training formal

training

program for

user groups

formal

training

program for

user groups

Team member

training

formal

program

formal

program

User involvement

in project

none none

The table shows that only the more tangible CSF-

aspects could be addressed positively in the

discussion sessions in both the organizations.

However, it appeared to be impossible to get enough

clarity regarding the usage of the qualitative

intangible aspects of this CSF.

CSF-9: BPR and Minimal Customization

Previous research shows that business process

should be molded, in advance of the actual

implementation project, to fit the new system.

Aligning the business process to the software

implementation seems to be critical. The usage of

process modeling tools is strongly advocated.

Table 9: Results regarding BPR and Minimal

Customization

CSF: BPR

and minimal

customization

OCE VDT

Business

process

redesign and

customization

BPR before

ERP

implementation;

customization:

emphasis on

business

processes

BPR during

ERP

implementation;

customization:

emphasis on

ERP system

Usage of

business

process

modeling

tools

formal

modeling tools

(ASAP)

no tools used

The table shows clear differences between the two

organizations. OCE conforms completely to the

described CSF while VDT takes a rather opposite

standpoint.

CSF-10: Software Development, Testing and

Troubleshooting

Key aspects in this CSF are: establishment of an

overall ERP architecture before deployment to

prevent reconfiguration at every stage of

implementation. Troubleshooting errors is critical.

The organization implementing ERP should work

well with vendors and consultants to resolve

software problems and also for planwise data

migration. Proper tools and techniques, and skills to

use them, will aid in ERP success.

Table 10: Results regarding Software Development,

Testing and Troubleshooting

CSF: Software

development,

testing and

troubleshooting

OCE VDT

Software

methods,

architecture and

tools

explicit ERP

architecture as

basis for ERP-

architecture

explicit ERP

architecture

Software testing,

trouble shooting

advanced

methods and

tools, e.g.

SAP Solution

Manager

advanced

methods and

tools, e.g.

ABAB

workbench

Data migration formal plan

available

formal plan

available

CRITICAL SUCCESS FACTORS IN ERP PROJECTS: Case studies in two industrial organizations in the netherlands

Regarding this CSF it became clear that both

organizations covered completely and professionally

the specified sub-CSFs.

CSF-11: Monitoring and Evaluation of

Performance

Project management based criteria should be used to

measure against completion dates, costs and quality.

Operational criteria should be used to measure

against the production system.

Table 11: Results regarding Monitoring and Evaluation of

Performance

CSF:

Monitoring and

evaluation of

performance

OCE VDT

Measuring

project

performance,

e.g.

achievements

against project

goals

periodically

measured

periodically

measured

Measurement

of operational

criteria to

measure against

the production

system

measurement

of operational

criteria based

on explicit

Critical Project

Indicators

(CPIs)

measurement

of operational

criteria

At OCE measurement is elaborated on two levels,

respectively project performance and against the

production system. At VDT only the project level is

covered.

4 CONCLUSIONS

The presentation of the research results in the tables

in section 3 shows that CSFs can (partly) be

recognized and discussed with the project

management of ERP implementation projects. In

discussion sessions with the management of two

distinct ERP implementation projects, both

(dis)advantages of CSF-usage, as well as

shortcomings of project management, became clear.

Based on the results some recommendations have

been developed for on the one hand CSF elaboration

and improvement, and on the other hand ERP

implementation management improvement.

Hereafter we briefly summarise the main results.

1: CSFs being recognized and used.

Most CSFs could be addressed with the project

management of both the ERP implementation

projects and lead to fruitful discussions, in particular

CSFs such as CSF-5 Project Management, CSF-11

Monitoring and evaluation of Performance.

However, only one CSF is treated in a more or less

identical way in both projects, namely the

‘technology oriented’ CSF-10 Software

Development, Testing and Troubleshooting. Based

on the discussed sub-CSFs we concluded that both

organizations have professional software

development and testing departments that make use

of ‘state-of-the-art’ methods and tools.

CSFs that show big differences in the way they are

used in both projects are some of the so-called

‘organization oriented’ CSFs, respectively CSF-2

Top Management Support, CSF-3 Business Plan and

Vision, CSF-6 Project Champion and and CSF-9

BPR and Minimal Customization. The differences

between the two projects seem to be consistent: the

OCE project addresses each of the CSFs extensively

and formally, while the VDT project doesn’t. The

rationale for this could be that the ERP

implementation at VDT is considered to be the

responsibility of a particular project management

who has to do the job with a particular (and

dedicated) team. The VDT higher level management

has little confidence, and doesn’t want to spend extra

resources, in steering such a project from a higher

level (CSF-2, CSF-6), and/or in embedding the

project in an overall business plan and vision (CSF-

3, CSF-9).

Recommendation-1

The two projects are currently in their second

and third phase of ERP implementation (see

section 2). Still, no serious problems have

occurred, although rather big differences in

‘organization oriented’ CSF-usage could be

identified. In on-going case study research we

will continue to investigate these differences and

we will strive at the determination of the real

importance of particular ‘organization oriented’

CSFs for ERP implementation.

2: CSFs being recognized, but not used

Some sub-CSFs that seem to have a high importance

in literature are not at all addressed in the two ERP

implementation projects, respectively:

- the sub-CSF Incentives for both team

members and management (of CSF-1 ERP

Teamwork and Composition);

- the sub-CSF Management of user input (of

CSF-4 Effective communication);

ICEIS 2005 - DATABASES AND INFORMATION SYSTEMS INTEGRATION

- the sub-CSF Coordinated training and

active human resource department (of CSF-

5 Project Management).

Regarding the first sub-CSF it appeared to be

common (European?) business policy in the two

organizations that no explicit connections are made

between successful work and incentives, such as

extra bonuses and/or other rewardings. Regarding

the second and the third sub-CSF mentioned above:

the project management of both projects considered

the way they (had) treated this CSF as a shortcoming

of their project management and defined some

improvement activities.

Recommendation-2

Differences regarding the way CSFs are used in

practice should be investigated on the level of

sub-CSFs. Sub-CSFs offer the opportunity to

define a particular CSF in a formal and

measurable way. Based on sub-CSF research

more precise explanations can be given for

particular shortcomings of an ERP project and/or

motives can be identified for not using a CSF as

defined in literature.

3: CSFs not being recognized and not being used.

CSF-7 and CSF-8, respectively Appropriate

Business and Legacy Systems and Change

Management and Culture are hardly being

recognized in each of the projects. The reason is that

they cover a too broad range of intangible and

subjective aspects, which makes it impossible to get

clear consensus on their precise meaning and their

impact on successful ERPimplementation. Therefore

they are not being used as management instrument

for controlling and monitoring an ERP

implementation project.

Recommendation-3

The discussion sessions with the project

management made clear that further elaboration of

particular CSFs is needed, e.g. regarding the

subjective and intangible elements in the defined

CSFs. In on-going case study research we will

investigate the possibilities of elaborating these

CSFs, e.g. in terms of practical guidelines for their

usage as an instrument for monitoring and

controlling ERP implementation projects.

Case study research on CSFs for ERP

implementation shows that CSFs, as identified in

literature, are not only abstract concepts and terms

but that they can be applied fruitfully in industrial

practice. The research results can be used both for

the improvement of the conceptual background of

the CSFs (e.g. the unified CSF models from

literature) and for the improvement of the actual

controlling and monitoring of ERP implementation

projects.

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CRITICAL SUCCESS FACTORS IN ERP PROJECTS: Case studies in two industrial organizations in the netherlands