Professional blog

Assignment -2 Read the case study ‘Using a Case Study to test the three key social enablers in ERP implementation’. The key findings are shallow clichés. They are: ï‚·Strong and committed leadership at the top level ï‚·Open and honest communication ï‚·Balanced and empowered teams These items disclose the biases of the researchers and do little to assist with understanding what makes an ERP project successful. Do some research on ERP implementation. Identify other factors which may account for the success of ERP implementation.ERP implementations are complex undertakings. 1. What is ERP? (around 100-200 words)

[-Describe Functions

-Use Commercial Examples such as SAP, Oracles etc]

2. Four Success Factors for E.R.P

A. Business Plans, Goals, Strategy and Mission

(-Match business goal?)

B. Project management 

(-analysis of what you need, design E.R.P for your business, integration with other system, training, maintenance)

C. Testing (about 200 words) 

(-Make sure it works)

D. Change management. (How will you change? Its business process)

Introduction ERP (Enterprise Resource Planning) systems may well count as ‘the most important development in the corporate use of information technology in the 1990s’ (Davenport, 1998). ERP implementations are usually large, complex projects, involving large groups of people and other resources, working together under considerable time pressure and facing many unforeseen developments. Not surprisingly, many of these implementations turn out to be less successful than originally intended (Davenport, 1998; Avnet, 1999; Buckhout et al, 1999). Over the past few years, 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. Now we even have available a ranked version of such a list, based upon a survey among managers of organisations that have recently gone through an ERP implementation process (Somers & Nelson, 2001). However, at present it is not yet clear how these CSFs interrelate. It seems unlikely that they all work in isolation, without one CSF also Correspondence: H Akkermans, Eindhoven University of Technology, Technology Mangement, PO Box 513, 5600 MD Eindhoven, The Netherlands Email: H.A.Akkermanstm.tue.nl affecting another and vice versa. At present, what we have are ‘laundry lists’ (Richmond, 1993) of relevant CSFs. However, for the time being, we have little theory on how these CSFs affect each other. This article describes an exploratory research study where this particular ranked list of CSFs was used to analyse a case study of an ERP implementation. This implementation at first experienced severe difficulties but turned around remarkably after a project crisis had resulted in changes in several of the CSFs for this case. This article shows how, at least in the case studied, these CSFs affected each other in a reinforcing manner. It argues that the same reinforcing ‘loops’ of causal relationships that at first led to a vicious cycle, or downward spiral, of ever-degrading performance after the crisis led to a virtuous cycle, or upward spiral, of continuously improving implementation success (cf Senge, 1990; Sterman, 2000). Critical success factors for ERP implementations In a recent article by Toni Somers and Klara Nelson (Somers & Nelson, 2001), a very useful and wellgrounded 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 of the general literature on IT implementation, BPR (Business Process Reengineering) and project management. This list was then rated by 52 senior managers. This group consisted mainly of CIOs36 Vicious and virtuous cycles in ERP impelementation H Akkermans and K van Helden (Chief Information Officer), MIS (Management Information Systems) managers, directors, vice-presidents (VPs) or executive vice-presidents (EVPs). The companies involved were US firms that had completed their ERP implementation either last year or longer ago. Table 1 shows the resulting ranked list. In the remainder of this article, we will focus on the top 10 CSFs, which are italicised in Table 1. The choice for precisely this number was somewhat arbitrary, but worked out well in our analyses, as will become apparent later on. Strongly influenced by the sound literature study underlying Somers’ and Nelson’s ranked list, we will briefly discuss each of these top CSFs. Together, they form an interesting mix of more conventional, ‘hard’, implementation aspects, such as clear goals and objectives and strong project management, and ‘softer’ aspects, such as team competence and interdepartmental communication and collaboration. Most of them would hold for IT implementation projects in general, but some are more important for ERP projects in particular. (1) Top management support. If top management is not actively backing an all-pervasive project like an ERP implementation, there is little hope for it. This is especially so in the early stages of such a project (Slevin & Pinto, 1986; Bingi et al, 1999). It is probably true for most implementations of innovations into organisations (Jarvenpaa & Ives, 1991). On the other hand, it would be unwise to suggest that top management is omnipotent in this Table 1 Mean rankings of CSFs by degree of importance in ERP implementation Critical success factora Mean (1) Top mangement support 4.29 (2) Project team competence 4.20 (3) Interdepartmental co-operation 4.19 (4) Clear goals and objectives 4.15 (5) Project management 4.13 (6) Interdepartmental communication 4.09 (7) Management of expectations 4.06 (8) Project champion 4.03 (9) Vendor support 4.03 (10) Careful package selection 3.89 (11) Data analysis and conversion 3.83 (12) Dedicated resources 3.81 (13) Steering committee 3.97 (14) User training 3.97 (15) Education on new business processes 3.76 (16) BPR 3.68 (17) Minimal customisation 3.68 (18) Architecture choices 3.44 (19) Change management 3.43 (20) Vendor partnership 3.39 (21) Vendor’s tools 3.15 (22) Use of consultants 2.90 a Italicised CSFs used in subsequent analysis. kind of process. Middle management and other staff are at least as important, but will play different roles (Mumford, 1983; McKersie & Walton, 1991). However, if top management permanently delegates its responsibilities to technical experts, the chances for project failure are high (Ewushi-Mensah & Przanyski, 1991). (2) Project team competence. This CSF is one of those that was originally not very high on Somers and Nelson’s (2001) list but that ended up remarkably high when ranked by the executives that filled in their survey. Indeed, it seems there has not been that much research regarding the impact of project team competence on IT implementation success. Somers and Nelson do refer to some vendor-related documentation (Bancroft et al, 1998) and APICS literature (Kapp, 1998). However, one also has to look into literature from other fields where the importance of team competence has been well recognised, such as Argyris and Scho¨n (1979), McGrath (1984), Senge (1990) or Katzenbach and Smith (1993). (3) Interdepartmental co-operation. Another surprisingly high-ranking factor is interdepartmental cooperation. Then again, perhaps it is less surprising that the executives ranked this factor so high than that in Somers and Nelson’s original list, which was based on their literature review and not on assessments by managers, it appeared as low as No. 20. For surely, ERP systems are really about closely integrating different business functions; this is what sets them apart from many other IT efforts. Therefore, close co-operation between these business functions would seem to be a natural prerequisite (Stefanou, 1999). Indeed, one recent study found closer interdepartmental collaboration as one of the main post-ERP implementation benefits (McAfee, 1998). (4) Clear goals and objectives. It has long been common knowledge that the first phase of an IT project should start with a conceptualisation of goals and ways to accomplish these (Cleland & King, 1983; Slevin & Pinto, 1987). Clear goals and objectives seem to form a clear-cut CSF, but can actually be rather problematic. This is because, at the outset of an ERP project, it is often very difficult to determine them in a clear-cut manner. Hence the call of Austin and Nolan to manage ERP initiatives as new business ventures, rather than as IT projects (Austin & Nolan, 1998) and the suggestion of Austin and McAfee to employ a path-based approach to ERP implementation (Upton & McAfee, 1997). On a more methodological level, this viewpoint is in line with the concept of IS development as one of evolutionary complexity (Lycett & Paul, 1999). (5) Project management. The complexity of ERPVicious and virtuous cycles in ERP impelementation H Akkermans and K van Helden 37 implementation is very high, given the vast combination of hardware, software and organisational issues involved (Ryan, 1999). One approach to overcoming this kind of complexity is to stress the need for ‘a great amount of methodical planning and calculated management’ (Soliman & Youssef, 1998 p. 890). This approach is often taken in textbooks on IT project management (eg Hoffer et al, 1998). However, as organisations and projects evolve over time, so should project management priorities. Some degree of improvisation (Macredie & Sandom, 1999) may also need to be part of the skill set of ERP project managers. (6) Interdepartmental communication. The importance of communication across different business functions and departments is well known in the IT implementation literature. According to one author on IT project management, ‘communication is the oil that keeps everything working properly’ in these contexts (Schwalbe, 2000). Slevin and Pinto (1986) reached similar conclusions for project management in general. As noted above, this need for communication across functional boundaries is all the more important in an ERP context since the primary objective of ERP systems is to integrate business functions (Davenport 1998). (7) Management of expectations. Successfully managing user expectations has long been known to be important for successful implementations of IT systems in general (Ginzberg, 1981). Misalignment of expectations is common, for instance through overselling of the vendor or by underestimation of the complexity of ERP implementation by the organisation. Therefore, management of expectations remains important through all stages of the implementation life cycle (Hoffer et al, 1998). (8) Project champion. ‘The success of technological innovations has often been linked to the presence of a champion, who performs the crucial functions of transformational leadership, facilitation, and marketing the project to the users’ (Beath, 1991; quoted from Somers & Nelson, 2001). Usually, this will be somebody at senior management level, so that this person has the authority to make substantial organisational changes happen (McKersie & Walton, 1991). One obvious place to look for such a champion role is with the CIO, or else the CEO (even better) or VP in charge of IT (Willcocks & Sykes, 2000). (9) Vendor support. A project as all-pervasive as an ERP implementation cannot be delegated to an outside party. In fact, strong reliance on outside consultants or vendor support was found to have a negative correlation with project success for MRP II implementations (Burns et al, 1991). On the other hand, a company typically does not have all the technical and transformational skills in-house for managing such a major undertaking on its own. Therefore, it is also not surprising that other research has shown project success to be positively associated with fit and compatibility with the IT vendors employed (Thong et al, 1994; Janson & Subramanian, 1996; Willcocks & Sykes, 2000). (10) Careful package selection. ERP vendors may claim that their systems are overlapping in functionality but they are not, at least not in full. For instance, some packages are more suited for larger firms, some more for smaller ones. Some packages have become a de facto industry, some have a stronger presence in certain parts of the world. And then, once the choice for the package is made there is the decision to be made as to what versions or modules of the package would best fit the organisation (Piturro, 1999). In short, if the wrong choices are made, and these choices have to be made very early on, the company faces either a misfit between package and business processes and strategy, or a need for major modifications, which are time-consuming, costly and risky (Janson & Subramanian, 1996). Research methodology A theory-building case study research design In this research, our objective has been not just to test the explanatory power of the existing CSF list of Somers and Nelson (2001) in a specific case but also to extend it into a richer framework, ie one that would describe causal interrelations between the individual CSFs. For this purpose, we have employed a case study research design. The case study is a well-known research method for exploratory, theory-building research (Eisenhardt, 1989; Yin, 1989). As a research method, case studies, and certainly single-case ones, score low on generalisability of findings. However, on the other hand, their richness of data lends themselves well for the inductive process of theory building. It is precisely this ‘intimate connection with empirical reality that permits the development of a testable, relevant, and valid theory’ (Eisenhardt, 1989 p 532). Action research for research relevance In this research, the authors themselves were actively involved as consultants to the management of the company. We fulfilled this role for 3 months in the fourth quarter of 1997 and the first quarter of 1998. Afterwards, we changed roles and became neutral observers to the changes the company was undergoing for the next 2 years. As will subsequently become clear, a key turnaround in the ERP effort was initiated during the relatively short period that we were actively involved as consultants. This makes the research reported here clearly38 Vicious and virtuous cycles in ERP impelementation H Akkermans and K van Helden action research (Reason & Bradbury, 2000). The choice for an action research design has several clear benefits in studying a phenomenon such as the current one. First, it provides the ability to observe up close an organisation during a period of strong instability, while it is experiencing its periods of most drastic change, when normally often no outsiders would be allowed. As Arie Lewin once put it: ‘If you want to understand something, try to change it’ (Daft & Lewin, 1990). Secondly, it ensures the direction of the research to be of guaranteed managerial relevance, since company management is closely involved in the research effort as it progresses (Gill, 1983). Thirdly, it indirectly generates the close relations and common understanding that enable researchers to revisit the company during subsequent periods of change to observe and reflect with members of the organisation on ultimate causes and consequences of the changes observed. Measures to ensure rigor and reliability Case study research in general, and action research in particular, are arguably well suited to ensure relevant IS research regarding organisational change processes (Galliers & Land, 1987), but also pose considerable problems in ensuring sufficient rigor and reliability. By reliability is meant the degree in which statements are based on a careful observation of reality, rather than on accidental circumstances regarding measurement instruments or the researchers’ own biases as people being personally involved (Yin, 1989). We took several measures to ensure adequate levels of reliability for this research. In general, these all boil down to limiting personal biases by employing as many independent perspectives and sources of data as possible in an iterative process of data collection, analysis, reflection and synthesis. The goal of having different perspectives was accomplished by (1) having independent interviewers for post-project evaluation, (2) interviewing multiple members of the organisation coming from different backgrounds, (3) performing a so-called member check by letting preliminary research results be assessed by these respondents and peer review of these findings by presenting them at two subsequent peer-reviewed international academic conferences. The goal of multiple sources of data as to enable triangulation was achieved by collecting data at different points in time, again with different stakeholders and comparing these with project documents and personal research notes. Theory-driven case selection In order to learn more about CSFs in ERP implementation, one would normally need at least two cases: one where project success was low and one where success was high. Then, most of the variables that are not of primary interest, such as firm size, industry, time frame, package type etc. would have to be kept identical as much as possible. This is the concept of theory-driven case sampling, as developed . However, in this particular instance, it was possible to suffice with a case within a single company. This is because we had ample data on a particular implementation where project performance was at first very low, almost leading to a complete failure of the project, and then bounced back again to reach very satisfactory results in the end. In this way, we had both high and low implementation success and, at the same time, identical values for many of the variables not of primary interest, since both stages concerned the same firm. Research questions According to Eisenhardt (1989), ‘An initial definition of the research question, in at least broad terms, is important in building theory from case studies’. For our research, given the state of the art of research on CSFs for ERP implementation, this resulted in the following two ex ante research questions: Research question 1: Can the Somers and Nelson list be helpful in arriving at a better understanding of root causes of E