ENTERPRISE RESOURCE PLANNING SUCCESS: A MANAGEMENT THEORY APPROACH TO CRITICAL SUCCESS FACTORS BY JOSEPH BRADLEY A Dissertation submitted to the Faculty of Claremont Graduate University in partial fulfillment of the requirements for the degree of Doctor of Philosophy in the Graduate Faculty of Executive Management CLAREMONT, CALIFORNIA 2004 Approve* PauKGray, B a b . Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. UMI Number: 3139266 Copyright 2004 by Bradley, Joseph All rights reserved. INFORMATION TO USERS The quality of this reproduction is dependent upon the quality of the copy submitted. Broken or indistinct print, colored or poor quality illustrations and photographs, print bleed-through, substandard margins, and improper alignment can adversely affect reproduction. In the unlikely event that the author did not send a complete manuscript and there are missing pages, these will be noted. Also, if unauthorized copyright material had to be removed, a note will indicate the deletion. ® UMI UMI Microform 3139266 Copyright 2004 by ProQuest Information and Learning Company. All rights reserved. This microform edition is protected against unauthorized copying under Title 17, United States Code. ProQuest Information and Learning Company 300 North Zeeb Road P.O. Box 1346 Ann Arbor, Ml 48106-1346 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Copyright by Joseph Bradley 2004 All rights Reserved Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. We, the undersigned, certify that we have read this dissertation o f F. Joseph Bradley and approve it as adequate in scope and quality for the degree o f Doctor o f Philosophy. Dissertation Committee: 7 'aul Gray, CommittepChair gmA, Date VYjQfftMdL6____________ bph Mafciarello, Committee Member Conrad Shayo, Committee Member ! Date Date Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 9., Abstract Of The Dissertation ENTERPRISE RESOURCE PLANNING SUCCESS: A MANAGEMENT THEORY APPROACH TO CRITICAL SUCCESS FACTORS by JOSEPH BRADLEY CLAREMONT GRADUATE UNIVERSITY: 2004 This study examines the critical success factors for implementing Enterprise Resource Planning systems in the framework of classical management theory. Sneller (1986), in an earlier study, identified critical success factors in the implementation of materials requirements planning systems (MRP). Since the Sneller study, software vendors have enhanced the functionality of MRP systems, first by developing manufacturing resource planning systems (MRP II) and subsequently by developing enterprise resource planning systems (ERP). As a result of expanded functionality, implementation of such systems affects a much wider portion of the business enterprise than operations and logistics. ERP systems are complex and expensive to implement. This study will examine critical success factors for ERP systems implementation suggested in the Information Systems and ERP literature. Sneller’s work on MRP surveyed material managers, as MRP dealt with their functional areas of responsibilities. This study surveys a wider range of top Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. functional managers to reflect wider organizational impact of the expanded functionality of ERP. Eight implementation projects were examined. This study uses a six dimensional view (William H. DeLone & McLean, 1992) of success compared to the two dimensional view of success used by Sneller. The purpose of this research is to investigate the critical success factors for a successful ERP implementation. Additional questions that will be investigated are: • Are the company’s specific goals for embarking on an ERP project related to project success? • - Is prior organizational experience with a major systems implementation (such as MRP or MRP II) a critical success factor? • Does an ERP system lead to competitive advantage, or is it a competitive necessity? The study finds that the experience of the project manager, quantity and quality of training and the effectiveness of a project champion lead to successful implementations. Both successful and unsuccessful firms use practices such as establishment of a project headed by a project manager, training, use of consultants, and control by a steering committee. No evidence was found to support integration of business processing and IT planning, reporting level of project manager, involvement of general management or role of management in reducing user resistance. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. ACKNOWLEDGMENTS The journey to a PhD is not completed without the support, friendship and advice of numerous people and organizations. The College of Business at Central Washington University provided me financial support for the production and mailing of my questionnaires and travel to Houston to conduct three case studies. Loren Carroll, a friend and business associate since 1965, was kind enough to allow me to conduct case studies in the two companies he manages, M-l Drilling Fluids and Smith International Inc. Janet Hall, Director of Information Technology at M-l Drilling Fluid, arranged the details my case study visits at both M-l and Smith and proof read the M-l case for accuracy. Many other Smith and M-l employees took their time to discuss their involvement in the ERP project. The faculty at the Drucker Graduate School of Management all contributed to my education in management. I like to mention a few who had a special impact. • Richard Ellsworth got me hooked on the Drucker EMBA program with his Current Issues in Strategic Management class, my first class in the EMBA program. • Vijay Sathe ignited my desire to continue studying management and to pursue a doctoral degree in his course in Strategy and Organizations. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. • Peter Ring Smith (Visiting Professor from Loyola Marymount University) provided me with the confidence that I could complete the PhD program, treating all of us in his strategy literature review as emerging scholars. • Robin Cooper provided me with the desire to continue my education and the inspiration to embark on a teaching career. • Don Griesinger provided support to me along with all the doctoral students in his EMGT 494 doctoral research seminars and literature review class. My dissertation committee provided immeasurable support and encouragement. My chair, Paul Gray, provided me the guidance, help, inspiration, and encouragement I needed to complete the dissertation. Members of my cohort group of the entering PhD class of 1998, Marie Tumolo and Olivia Neece, were an important source of support and encouragement. Drucker students Bill Allison and Bennett McClellan assisted in contacts for case studies and questionnaires. My wife, Marilyn, endured my absence weekends and evenings and my stress while attending classes and writing my dissertation, even though she thought I was crazy embarking on a new career when she thought I should be thinking about retirement and taking life easier. She also folded and stuffed hundreds of questionnaires for me. Thanks to all of you. vii Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. TABLE OF CONTENTS CHAPTER 1- INTRODUCTION 1 DESCRIPTION OF ERP SYSTEMS 2 WHY DO FIRMS ADOPT ERP SYSTEMS? 7 WHY DO FIRMS NOT ADOPT ERP SYSTEMS? 11 RISKS ASSOCIATED WITH ERP IMPLEMENTATION 13 CRITICAL SUCCESS FACTORS 15 CRITICAL SUCCESS FACTORS FOUND PREVIOUSLY 16 DEFINITION OF SUCCESS 22 IMPORTANCE OF TOPIC 24 CHANGES SINCE SNELLER’S STUDY 26 CHAPTER II - LITERATURE REVIEW 28 OVERVIEW 28 MRP, MRPII AND ERP—AN EVOLUTION 28 OPERATIONAL PLANNING MODEL 37 PLANNING 38 ORGANIZING 40 STAFFING 42 LEADING 47 CONTROLLING 51 MEASURES OF SUCCESS 53 viii Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. CHAPTER III - RESEARCH QUESTION FRAMEWORK, AND METHODOLOGY 59 METHODS 65 CASE STUDIES 65 QUESTIONNAIRE 66 CHAPTER IV - CASE STUDIES 73 INTRODUCTION 73 CASE 1 - PACIFIC CLAY PRODUCTS INC 77 CASE 2 & 3 SMITH INTERNATIONAL, INC. 91 CASE 2 - SMITH BITS/SMITH SERVICES 93 CASE 3 - M-l, LLC 103 CASE 4 - PACIFIC AEROSPACE 117 CASE 5 - LITTON INDUSTRIES 125 CASE 6 - HALLIBURTON 136 CASE 7 - PACCAR / KENMEX 145 CASE 8 - NORTHROP GRUMMAN 153 SUMMARY OF CASE STUDIES 159 CHAPTER V ANALYSIS METHODS AND RESULTS 162 DEMOGRAPHIC INFORMATION 163 SUCCESSFUL VS. UNSUCCESSFUL 166 HYPOTHESES 168 OTHER FINDING 225 COMPANY GOALS 225 ix Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. COMPETITIVE ADVANTAGE PRIOR MAJOR SYSTEMS IMPLEMENTATION EXPERIENCE 229 231 CHAPTER VI. CONCLUSIONS 233 APPENDIX 1. ERP IMPLEMENTATION QUESTIONNAIRE 262 APPENDIX II. QUESTIONNAIRE TRANSMITTAL LETTER 274 APPENDIX III. CASE STUDY FIRM CONSENT LETTER 276 APPENDIX IV. CASE STUDY INDIVIDUAL CONSENT LETTER 278 APPENDIX V. CASE STUDY INTERVIEW QUESTIONS 280 APPENDIX VI. MRP IMPLEMENTATION QUESTIONNAIRE 288 APPENDIX VII FREQUENCY ANALYSIS OF INDEPENDENT VARIABLES 295 APPENDIX VIII GLOSSARY 309 REFERENCES 312 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Index of Tables Table No. Chapter 1 1-1 I-2 Chapter II 11-1 II-2 Chapter IV IV-1 IV-2 Chapter V V-1 V-2 V-3 V-4 V-5 V-6 V-7 V-8 V-9 V-10 V-11 V-12 V-13 V-14 V-15 V-16 V-17 V-18 V-19 V-20 V-21 V-22 V-23 Description Page Some Functions Available in SAP R/3 Nah’s Critical Success Factors 6 21 Evolution of ERP Systems Typical SAP Functions 29 35 Summary of Case Study Site Characteristics Summary of Case Study Findings 76 160 Questionnaire Mailing Summary Primary Products of Respondents (V57) Sales Volume of Respondents (V58) Implementation Completion Dates (V59) ERP Software Used by Respondents (V60) Implementation Method (V61) Functional Area of Respondent (V62) Variable V1 Success Background Information Results Planning Variables - V15 through V18 T-test for Variables V15 to V18 Multiple Regression Results of Variables V15 with V12 Multiple Regression Results of Variables V15 with V13 Organizing Variables - V19 through V22 T-test for Variables V19 to V22 Multiple Regression Results of Variables V19 Multiple Regression Results of Variables V19 with V12 Multiple Regression Results of Variables V19 with V13 Organizational Variables - V23 through V26 T-test for Variables V23 to V26 Multiple Regression Results of Variables V31 with V12 Staffing Variables - V27 through V-30 T-test for Variables V27 to V30 xi to V18 162 164 164 164 165 165 166 166 168 173 175 176 to V18 177 to V22 to V22 178 179 180 182 to V22 183 to V37 184 185 186 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 187 188 V-24 V-25 V-26 V-27 V-28 V-29 V-30 V-31 V-32 V-33 V-34 V-35 V-36 V-37 V-38 V-39 V-40 V-41 V-42 V-43 V-44 V-45 V-46 V-47 V-48 V-49 V-50 V-51 V-52 Multiple Regression Results of Variables V27 to V30 Standardized Coefficients and Correlations of Predictor Variables V27 and V30 Multiple Regression Results of Variables V27 to V30 with V12 Standardized Coefficients and Correlations of Predictor Variables with V12r Multiple Regression Results of Variables V27 to V30 with V13 Standardized Coefficients and Correlations of Predictor Variables V27 to V30 with V13r Staffing Variables - V31 through V37 T-test for Variables V31 through V37 Multiple Regression Results of Variables V31 to V37 with V12 Standardized Coefficients and Correlations of Predictor Variables V31 to V37 with V12r Multiple Regression Results of Variables V31 through V37 with V13 Staffing Variables - V38 through V41 T-test for Variables V38 through V41 Leading Variables - V16, V18, V42 T-test for Variable V16, V18 and V42 Leading Variables - V43 through V45 T-test for Variables V43 to V45 Multiple Regression Results of Variables V43 to V45 Standardized Coefficients and Correlations of Predictor Variable V43 Multiple Regression Results of Variables V43 to V45 with V12 Multiple Regression Results of Variables V Leading Variables - V46 through V49 T-test for Variables V46 through V49 Multiple Regression Results of Variables V46 to V49 with V12 Leading Variables - V50 through V54 T-test for Variables V50 to V54 Multiple Regression Results of Variables V50 to V54 with V12 Multiple Regression Results of Variables V50 to V54 with V13 Summary of Statistical Analysis of Hypotheses Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 189 190 192 193 194 195 196 197 200 201 202 204 205 207 208 209 210 210 211 212 213 214 215 216 218 219 220 222 224 V-53 V-54 V-55 V-56 V-57 V-58 V-59 Chapter VI VI-1 Company Specific Goals for ERP Implementation (V14) Company Specific Goals (V14) Multiple Regression Results of Variables V14a1 through V14g1 T-test for Variable V55 Multiple Regression Analysis Results of Variable V55 Standardized Coefficients and Correlations of Predictor Variable V100 Prior Major Systems Experience (V56) 225 Levels of Business Planning and IT Planning Integration 235 225 228 229 229 231 231 Index of Figures 11-1 II-2 Evolution of ERP System Information Systems Success Model Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 29 56 CHAPTER I INTRODUCTION “Enterprise systems appear to be a dream come true. These commercial software packages promise the integration of all the information flowing through the company - financial and accounting information, human resource information, supply chain information, customer information. For managers who have struggled, at great expense and with great frustration, with incompatible information systems and inconsistent operating practices, the promise of an offthe-shelf solution to the problem of business integration is enticing.’’(Davenport, 1998) In the mid-1990’s, businesses around the world were spending approximately $10 billion per year on enterprise resource planning systems (ERP) and about the same amount on consultants to install these systems (Davenport, 1998). An AMR study states that in 2001 “firms were expected to invest more than $47 billion on enterprise systems (ES) packages (Cotteleer, 2002).” Another AMR research study indicates that ERP will remain the biggest segment of large and mid-size companies’ IT application budgets through 2004 (Seewald, 2002). The magnitude of this expenditure makes knowledge of the factors most likely to result in successful ERP systems implementation a critically important topic for managers embarking on such projects and academics studying such implementations. Managerial and economic resources are scarce in all firms. Determination of the critical success factors will help management in allocating resources appropriately. In addition, ERP can be viewed as the first 1 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 2 wave of enterprise systems applications including customer relationship management (CRM) and supply chain management (SCM). Lessons learned from ERP will contribute to successful implementations of these systems (Brown & Vessey, 2003). In this introduction we will discuss the following: 1. The nature of enterprise resource planning systems 2. The reasons firms adopt these systems 3. The reasons firms do not adopt ERP systems 4. Risk associated with ERP implementation 5. Critical success factors found previously 6. Definitions of success for enterprise systems. 7. Importance of the topic DESCRIPTION OF ENTERPRISE RESOURCE PLANNING SYSTEMS. Enterprise resource planning systems (ERP), also known as enterprise systems (ES), evolved from material requirements planning (MRP) systems. ERP systems claim to be off-the-shelf solutions to a myriad of business problems. These integrated ERP packages replace hard-to-maintain solutions created by the IS departments of the firms or older off-the-shelf packages that often offered only piecemeal solutions. These older systems are frequently referred to as legacy systems. Legacy systems are transaction processing systems designed to perform specific tasks. Many of these systems became outdated as business needs changed and the hardware and software available in Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 3 the marketplace improved (Applegate, McFarlan, & McKenney, 1999). However, ERP systems are “expensive and difficult to implement, often imposing their own logic on a company’s strategy and existing culture (Pozzebon, 2000).” ERP implementations are often complex and experience serious problems. The determinants of a successful ERP system implementation are “still poorly understood.” (Davenport, 1998) A recent summary of ERP literature states that while the difficulties and failures or ERP implementations have been widely cited in the literature, “research on critical success factors (CSFs) in ERP implementation is rare and fragmented.” (Nah, Lau, & Kuang, 2001) ERP implementations can be characterized by three distinguishing characteristics. (Somers, Ragowsky, Nelson, & Stern, 2001) 1. These systems are “profoundly complex pieces of software, and installing them requires large investments of money, time and expertise.” (Davenport, 1998) 2. ERP systems are packages that may require changes in business processes and procedures, may induce customization, and leave the firm dependent on the vendor for support and updates (Lucas, Walton, & Ginsberg, 1988). 3. The adopting firm is usually required to reengineer business processes. ERP implementations must be managed as a program of broad organizational change rather than a software implementation (Markus & Tanis, 2000; Somers et al., 2001). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 4 MRP systems were developed in the 1960s and 1970s as the central activity in material planning and control. “The managerial objectives of MRP are to provide ‘the right part at the right time’ to meet the schedules for completed products.” (Vollmann, Berry, & Whybark, 1984) MRP systems work backwards from the required delivery date of a product to the date raw material orders need to be placed and the date production of the product should begin. MRP accomplished these tasks by considering required production time, inventory on hand, inventory on order, and work in process. Based on this analysis, the MRP system recommends when additional material should be purchased and in what quantities. When properly used, this technique reduces the level of inventory necessary and still ensures raw materials will be on hand when needed for production. Reducing the amount of inventory required to be on hand frees up cash for other purposes and minimizes the firm’s exposure to inventory losses from obsolescence. A weakness of MRP systems was that these systems use an infinite capacity-planning model (Palaniswamy & Frank, 2000). This model does not take into account the capacity of each work center and can suggest an unrealistic schedule that would overload individual work centers. An extension of MRP is manufacturing resource planning or MRP II. In addition to planning inventory purchases, MRP II used the database to calculate expected cash flows, machinery and equipment needs, labor needs and tooling requirements (Schonberger, 1986). “MRP II is a sequential technique that is used for converting a master production schedule (MPS) of the end products into Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. a detailed schedule for raw materials and components. It starts with sales and operation planning and demand management and ends with a detailed schedule for components to be made in-house as well as purchased from vendors.” (Palaniswamy & Frank, 2000) MRP II “is an automated system that makes scheduling and planning of all of a manufacturing enterprise’s resources practical.” (Gray, 1986) Gray points out the MRP II solves what Oliver Wight, a pioneer in the inventory and production control field, defined as “the ‘universal manufacturing equation’; ‘what are we going to make? What does it take to make it? What do we have? What do we need to get?’ MRP II answers the question, ‘What do we really need, and when do we need it?’ by taking a company’s high level plans and breaking them down to detailed schedules for material, capacity, cash and the like.” ERP expands the functionality of MRP and MRP II by integrating information throughout the entire organization in a single database. A typical ERP system offers functionality in financial information, human resources, operations and logistics, and sales and marketing, in addition to operations and logistics. “The great appeal of ERPs is that employees enter information only once and that information is then available to all systems companywide....This means everyone in the company can make decisions based on accurate, real­ time information (Laughlin, 1999).” Laughlin describes the typical processes involved in processing an order using an ERP system. “For example, a customer service agent receives a phone Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 6 call from an existing customer. The agent quickly locates the customer’s account, records the order details, prices the order, and checks the availability date. The customer confirms the order details and the agent books the order. That single entry triggers everything from the allocation of the finished product against the order to delivery and billing. That is, based on existing demand and allocation rules, the ERP will determine whether the product should come from current finished goods in a warehouse, in-process goods, scheduled production, or new production. It will set the order up for shipment based on information from either the customer or the customer master record, and, once the order is shipped, prepare an invoice and an accounts receivable entry (Laughlin, 1999).” TABLE 1-1. SOME FUNCTIONS AVAILABLE IN SAP R/3 Financials Accounts receivable and payable Asset accounting Cash management and forecasting Cost-element and cost-center Executive information systems Financial consolidations General ledger Product-cost accounting Profitability analysis Profit-center accounting Standard and period-related costing Operations and Loqistics Inventory management Material requirements planning Plant maintenance Production planning Project management Purchasing Quality management Routing management Shipping Vendor evaluation Human Resources Human-resources time accounting Payroll Personnel planning Travel expenses Sales and Marketina Order management Pricing Sales management Sales planning Source: Davenport (1998) Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. A list of some of the functions of SAP R/3, a popular ERP package, is shown in Table 1-1. Companies adopting ERP can install some or all of the functions as needed. ERP systems contain several configuration options for each business process based on best practices. However, this functionality may not fit the existing business processes of the firm adopting ERP, forcing the firm to reengineer its business processes to conform to the software package options. The resulting organizational change may be a significant challenge to the firm. “ERP implementations usually require people to create new work relationships, share information that was once closely guarded, and make business decisions they never were required to make (Appleton, 1997).” Laughlin describes organizational resistance as a common but intangible foe and a frequent source of “train wrecks” in ERP implementations (Laughlin, 1999). WHY DO FIRMS ADOPT ERP? Firms adopting ERP may have widely different goals. Markus and Tanis (2000) identify technical reasons and business reasons for adoption. Among the technical reasons are: • Reducing systems operating costs, • Solving specific problems such as Y2K, • Accommodating increased system capacity, and • Solving maintenance problems with legacy systems. Business reasons may include: Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 8 • The ability to present a single face to the customer • The ability to quote realistic delivery dates based on current inventory and shop capacity, • Accommodation of business growth, • Improvement of informal or inefficient business processes, • Standardize data, • Reduction of inventory carrying costs, and • Elimination of delays and errors in filling customer orders. Watson and Schneider (1999) attribute the rapid growth of the commercial market for ERP to the following factors: • Use of the popular client/server platform • Can be used as an enabler for reengineering projects • Y2K compliant • Marketed to CEO’s and CFO’s as “strategic solutions” rather than as transaction processing software • A way to outsource a significant part of the IS function. (Watson & Schneider, 1999) A study of member firms of the Financial Executives Institute examined the relationship between ERP adoption and environmental, strategic and structural determinants. The study found that ERP adoption was more likely under the following contingencies: • Coordination is critical to the organization Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 9 • The firm follows a low-cost or low-price strategy • The firm is centralized • The firm follows a top-down financial strategy • The firm differentiates itself based on technology rather than marketing. (Banker, Janakiraman, Konstans, & Slaughter, 2000) An example of a decision to adopt an ERP system is provided by Geneva Pharmaceuticals, a manufacturer of generic drugs. Faced with eroding margins and continuing price pressure, the existing systems were proving inadequate. Data shared across business units had to be re-keyed resulting in frequent errors. Data was locked in “functional silos” and did not support new processes. Geneva adopted ERP to solve the following problems: • “implement best practices in business processes, • integrate data across business units (hence reduce re-keying and maintenance costs), • enforce data standardization (to reduce software maintenance costs), • integrate well with new technologies or systems of acquired companies, • provide scalability with growing product and customer base, and • be Y2K (year 2000) compliant (Bhattacherjee, 2000).” Rohm and Haas embarked on a major SAP implementation in the midst of a 40-company buying spree that left the company in a state of “technological Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 10 chaos,” with 64 different systems running its critical tasks. The chemical industry was at an all time low and despite sales increases from $3.7 billion to $5.3 billion, headcount had doubled and return on equity fell by more than half to 12%. Rohm and Haas spent over $300 million on the project. As of 2003, 80% of the company is using SAP. (Schoenberger, 2003) For Rohm and Haas, the huge expenditure of ERP was a strategic necessity, not a luxury. A further reason for the adoption of complex information technologies, such as ERP, arises from the examination of the process of information adoption. Social groups that have a vested interest in their promotion promote the ideas and knowledge underlying complex information technologies. Many firms “adopted these technologies with very little real understanding about their complexity, with a resultant high level of failure (Newell, Swan, & Galliers, 2000).” New institutional theory provides further support for the adoption of information systems marketed aggressively to CEOs and CFOs. Top managers may adopt new system through a process of mimetic isomorphism, that is, organizations seek legitimacy by imitating other organizations in their institutional fields or organizations that interact in networks- i.e., customers, suppliers, competitors. The adoption of much of the quality movement can be attributed to this phenomenon (DiMaggio & Powell, 1983). ERP may be another example. The role of information technology in creating sustainable competitive advantage may be another reason for adopting new information systems. Information technology may have a role in creating sustained competitive Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 11 advantage. This belief is based on the two assertions underlying a resourcebased view of the firm: 1.) that resources and capabilities are different in different firms, 2.) and these differences can be long lasting. (Barney, 1991) Standard, off the shelf software packages, like ERP solutions, are available to all firms that can afford to pay for them, so ERP systems would not be the source of resource heterogeneity. However, the capability of using packaged software system effectively may not be homogeneous among firms. “If K-Mart could imitate WalMart’s system (i.e., the hardware and software), but could not use it as effectively as WalMart, WalMart’s system could still be a source of sustained competitive advantage (Mata, Fuerst, & Barney, 1995).” WHY FIRMS DO NOT ADOPT ERP SYSTEMS Markus and Tanis (2000) identified three very broad categories of reasons why firms that otherwise have all or some of the reasons to adopt ERP systems, do not adopt it or only adopt ERP in part. These firms may adopt only certain modules and rely on legacy systems or new custom systems for their needs. Other firms may begin an implementation only to discontinue it for a variety of reasons. The reason for this non-adoption or partial adoption can be categorized as follows: 1. Lack of feature-function fit 2. Company growth, strategic flexibility and decentralized decision­ making 3. Availability of alternatives to increase systems integration. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 12 Lack of feature-function fit may be due to the design of most ERP for discrete manufacturing. Many companies have specialized processes common to their industry, which may not be solved by the best practices embedded in ERP systems. The various modules may not fully support process manufacturing industries, such as food processing and paper manufacturing, project industries, such as aerospace, or industries that manufacture products with dimensionality, such as clothing or footwear. Companies concerned with maintaining rapid growth rates, those needing strategic flexibility and those without a “top down” decision making style may be non-adopters or partial adopters of ERP systems. Dell Computer Corp. planned full implementation of SAP R/3 but discontinued the implementation after installing the human resource module. Dell’s CIO expressed concern with the software’s ability to keep pace with Dell’s extraordinary growth rate. Visio, a software company subsequently acquired by Microsoft, expressed concern with the ability of SAP to handle the frequent changes it required to its sales analysis and commission requirements (Markus & Tanis, 2000). The experiences of Dell and Visio focus on the need for efficiency and flexibility in dealing with the external environment and internal processes. In a stable environment, mechanistic structures are appropriate consisting of “high degrees of standardization, formalization, specialization and hierarchy.” In a dynamic environment, organic structures are needed to enable organizations to be flexible to change products, processes and structures. In these organizations Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 13 low level of standardization, formalization, specialization and hierarchy are most appropriate. ERP may maximize organizational efficiency at the cost of flexibility (Newell, Huang, Galliers, & Pan, 2003). Lean enterprises succeed “as a growth strategy for increasing sales by trimming the company’s product delivery system into a competitive weapon.” Lean enterprises have difficulty using ERP systems due to the lack of flexibility. “ERP creates many nonvalue-added transactions by making companies track every activity and material price in the factory. This is counter to Lean philosophy, which aims at speeding up and smoothing production (Bradford & Mayfield, 2001).” Alternatives to ERP systems include data warehousing technologies that integrate data from source systems for query and analysis. These systems, sometimes described as “poor man’s ERP,” are limited by the quality of the underlying source systems (Markus & Tanis, 2000). RISKS ASSOCIATED WITH ERP IMPLEMENTATION Scott (2003) identifies risks in ERP implementations in the areas of project risks, information systems risks, organizational risks, and external risks. Project risks stem from the customization of purchased packages and the difficulty of interfacing with legacy systems. When firms believe their business process are unique, they may customize ERP software instead of adopting best practices imbedded in a standard implementation. Data conversion can also be a problem when firms do not clean up their data before embarking on a project. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 14 Project leadership, limiting project scope, avoiding customization, and a phased implementation (rollout) can minimize this risk (Scott, 2003). Information systems risks arise from system performance problems. ERP systems may be poorly configured or the hardware may need upgrading. Another risk arises when the use of multiple vendors creates the need for multiple interfaces. Multiple vendors contributed to the problems in the Hershey Food Corporation implementation. Information systems risks can be minimized by avoiding customization, use of data warehousing for reports and queries and avoiding multivendor implementations (Scott, 2003). Organizational risks of a bad ERP implementation can impact the firm’s operating profits. Customer deliveries can be delayed putting customer relationships at risk. Impacts can be with customers, financial performance, or internal business objectives. Organizational risks can be minimized with training and strong leadership, which assures that sufficient resources are allocated to the project and inspires employees who may resist the implementation (Scott, 2003). External risks center on litigation associated with the implementation. Firms with implementation problems may sue consultants and/or ERP vendors. Overbilling by consultants and use of incompetent trainees have been sources of litigation (Scott, 2003). Gore-Tex claims its consultant promised expert staff and delivered incompetent trainees. Managing consultants by specifying goals and individual competence of consultants can minimized this risk (MacDonald, 1999). Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 15 CRITICAL SUCCESS FACTORS. Bullen and Rockart (1981) define critical success factors (CSFs) as “the few key areas of activity in which favorable results are absolutely necessary for a particular manager to reach his goals.” They point out that an incredible number of things can divert a manager’s attention. A key to a manager’s success is to focus their scarcest resource of time “on those things that make a difference between success and failure (Bullen & Rockart, 1981).” Banfield refers to critical success factors as those activities that make “the difference between success and failure - or at least the difference between incremental results and breakthrough results (Banfield, 1999).” Drucker defines two requirements of controls. Controls must follow a principle of economy. “The fewer controls needed, the more effective they will be.” A second requirement is that controls must be meaningful. “One has to control by controlling a few developments which can have significant impact on performance and results (Drucker, 1973).” Both of Drucker’s requirements are consistent with the principle of critical success factors. Bullen and Rockart identify five prime sources of critical success factors: 1. The industry—some CSFs can be unique to the firm’s industry 2. Competitive strategy and industry position—a low-cost strategy will call for different CSFs than a differentiation strategy 3. Environmental factors—economy, political climate, population trends, generally things over which a firm has no control Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 4. 16 Temporal factors - areas can be critical over a short period of time 5. Managerial position - managers in different functional areas may have different CSR’s, i.e., Sales vs. Finance Bullen and Rockart demonstrated that CSFs are hierarchical in nature. CSFs can be identified at the industry level, the corporate level, the suborganizational level and the individual level. CRITICAL SUCCESS FACTORS FOUND PREVIOUSLY Sneller (1986) examined the critical success factors in the implementation of materials requirements planning systems (MRP). He applied classical management theory relating to the functions of a manager—planning, organizing, staffing, leading and controlling— using the Operational Management approach described by Koontz, O’Donnell, and Weihrich (1980). Sneller’s study was conducted at the sub-organizational level, which was appropriate for MRP systems as these systems impact primarily the manufacturing, and production and inventory control functions of the firm. Because of the expanded functionality of ERP systems compared to MRP systems, this dissertation requires the examination of CSFs at the organizational level of analysis. Sneller based his work on MRP installations on the results of questionnaires sent to 50 personal acquaintances or referrals to the author and 100 material managers listed in the 1985 edition of the American Electronics Association Directory. He believed that material managers would have the highest probability of having knowledge of successful and unsuccessful MRP Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 17 implementations. Based on sixty-one responses to his survey from these material managers for electronics companies, Sneller identified the following critical success factors in his study of MRP:Planning. A detailed formal plan. Training of management and users. Testing following training is also significant. Organizing Full time project manager.The higher the reporting level of project manager the higher the probability of success.Implementation group must be allowed discrete amount of time.Staffing Use of a consultant is helpful but will not guarantee success if other factors are ignored. Leading Senior management must show more than token support. Controlling Control must originate with top management and steering committee must meet at least monthly (Sneller, 1986). Sneller examined but failed to find a relationship between the following management practices and project success: • The amount of user participation in planning was not related to improved performance and user satisfaction in the implemented system. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 18 • The organizational reporting level of the project manager was not related to improved performance and user satisfaction in the implemented system. • High levels of MRP systems experience and / or high levels of previous project management experience, combined with strong motivation were not significantly related to improved performance and user satisfaction in the implemented system. • The use of a consultant during system implementation was not related to improved performance and user satisfaction in the implemented system. • The use of a formal tracking system by the steering committee was not related to improved performance and user satisfaction in the implemented system. Other lists of critical success factors abound in both popular and scholarly articles, but these lists are generally based on experience or casual observation, not controlled research. McDonnell (2000) offered the ten critical success factors for ERP upgrades summarized below. Although these CSFs relate to upgrading ERP systems to a newer version I believe they may be equally applicable to new implementations. “Spell out the strategic, tangible business and operational benefits and find ways to measure success in achieving them. Assign accountability and authority for those goals. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 19 Make sure all top management is united behind the business goals driving you upgrade. Because the biggest challenge is change management, retrain staff not only with new technical skills but also with skills that often result from upgrades and new job descriptions. Make good decisions faster that balance schedule and cost vs. benefits and risk. This is especially important because such projects cross functional lines. Implement creative incentives for your project team to reward their hard work and increased value. Be rigorous about project management and the implications of your partnerships with consultants. Look at the big picture, establishing a global architecture before deploying locally. Too many projects begin with a small pilot or in phases and then need to be redone when taken to other business units or countries Do process re-engineering before and during the project. It’s a mistake to think you can do this later or focus on installing the software first, which also includes many decisions on process. Pay attention to demanding training and support needs. Don’t try to save money by cutting training costs. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 20 Your organization needs to understand why the project is worth the pain of change. Your project team needs full-time members, minus the distractions of their real jobs. Your scope needs to be tightly focused to resist the temptation of widening the scope and reworking the project plan (McDonnell, 2000).” Another view of ERP success is provided by Laughlin (1999), who identifies six components of a “winning game plan for implementing ERP.” The six components are: “A motivating business justification, Internal business support, A strong internal owner, An empowered and influential internal team, Management driven change, and A proven external partner (Laughlin, 1999).” Nah (2001) reviewed ten articles written by academics and practitioners between 1998 and 2000 discussing “What are the key critical factors for ERP implementation success?” These articles discussed eleven critical success factors listed in Table I-2 together with the number of articles discussing each of the factors. Nah did not distinguish whether empirical research, case studies or other methods determined the factors mentioned. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 21 TABLE I-2 Nah’s Critical Success Factors Critical Factor No of articles mentioning ERP teamwork and composition • ERP project should be the teams top priority • The teams workload should be manageable • Incentives for successful implementation Change management program and culture • A culture of shared values is conducive to success Top management support • Align with strategic business goals • Tie management bonuses to project success • Top management priority Business plan and vision • Tie project to specific business model BPR and minimum customization • Willingness to change business to fit software • Software should not be modified Effective communications • Management of communications, education and expectations critical Project management • Individual or group should be given responsibility for success • Plan with well-defined tasks and accurate estimation of effort Software development, testing and trouble shooting • Appropriate choice of system functionality and links to legacy systems • W ork with vendors and consultants to resolve software problems Monitoring and evaluation of performance • Measurement against completion dates • Monitoring through milestones and targets • Management needs information on effect of project on business processes Project champion • Oversee entire life cycle of project • High level executive sponsor • Business leader should be in charge Appropriate business and IT legacy systems • Stable and successful business setting is essential Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 8 7 6 6 6 5 5 5 5 4 2 22 Brown and Vessey (2003) identify five success factors based on case studies of a dozen ERP implementations. The five factors are: • “Top management is engaged, not just involved • Project leaders are veterans and team members are decision makers • Third parties fill gaps in expertise and transfer their knowledge • Change management goes hand-in-hand with project management • A satisficing mindset prevails.” Several other authors have investigated ERP systems and the factors critical for successful implementation. A study based on four cases identified the following CSFs: support of senior management, redesign of business process to fit what the software will support, investment in user training, and use of “business analysts” with knowledge of both business and technology (Sumner, 1999). One study identified factors such as commitment from top management, selection and management of consultants and employees and training on the new system (Bingi, Sharma, & Godla, 1999). Another study identified success factors in software projects (Reel, 1999). An additional study developed a framework grouping success factors into strategic and tactical factors based on eight cases and a review of the literature (Holland & Light, 1999). DEFINITION OF SUCCESS Sneller’s study relied on two dimensions, improved performance and user satisfaction, to define a successful MRP implementation. Sneller’s Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 23 questionnaire used ten questions to operationalize these two success dimensions. Improved Organizational Performance. The first dimension measures improved business performance following an MRP implementation. White, Anderson, Schroeder and Tupy (1981) showed that successful implementations of MRP resulted in the following changes: increased inventory turnover, increased on-time deliveries, decreased lead times, decreased material shortages and decreased material expediters. User Satisfaction. The second dimension tested by Sneller is user satisfaction. Researchers have found functionality, equipment performance, interaction features, and office environments provide user satisfaction in information systems. Functionality was found to be the best predictor of user satisfaction (Bikson & Gutek, 1983; Gutek, Bikson, & Mankin, 1984). In addition to the above criteria, Sneller used a general question on the return on investment of the project. The perception by the questionnaire respondents of a positive rate of return on investment was necessary to define a project as successful. For purposes of this study, a six dimensional definition of success will be used. The six dimensions measured are: • Systems quality, • Information quality, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. • User satisfaction, • Individual impact and • Organizational impact. The selection of these six dimensions is discussed more fully in Chapter II. IMPORTANCE OF TOPIC Despite the large sums of money spent annually by business on implementation of ERP systems the reports of implementation failures abound. Hershey Foods embarked on an ERP investment in mid-1996 to solve its Y2K problem and improve its ability to perform just-in-time store deliveries to its customers (Severance & Passino, 2002). After spending $112 million on an ERP project, Hershey Foods Corporation was unable to fill Halloween candy orders in October 1999, resulting in a 19% drop in third quarter profits (Stedman, 1999). As a result of Hershey’s problems its stock price fell by a third and the firm lost market share to Mars and Nestle (Severance & Passino, 2002). Hershey estimates it suffered a 3% permanent decrease in market share from this experience (Sutton, 2003). A study by the PA Consulting Group found that “92% of companies are dissatisfied with results achieved to date from their ERP implementation and only 8% achieved a positive improvement in their performance ("ERP Implementation Disappoints Companies," 2000).” Davenport (1998) identifies several unsuccessful implementation efforts: Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 25 • Fox-Meyer Drug claims that an ERP system led to its bankruptcy. • Mobil Europe spent hundreds of millions on ERP, but abandoned the project when a merger partner objected. • Dell found that its ERP system did not support its new decentralized management style. • Applied Materials gave up on its ERP implementation when it became overwhelmed with the organizational changes it required. Markus and Tanis identify five areas in which ERP research is important to IS research. The areas are: 1. Financial cost and risk. ERP implementation is expensive and risky. Several visible failures have occurred and non-academic literature is questioning the benefits derived from such systems. Brown and Vessey (2003) observe “although failures to deliver projects on time and within budget were an old IT story, enterprise systems held even higher risks-they could be a ‘bet-ourcompany’ type of failure.” 2. Technical issues. Technical challenges of ERP systems include software selection methods, software configuration techniques, systems integration strategies, and data quality. 3. Managerial issues. ERP implementation projects involve many different organizations (suppliers, customers, etc.) and cut across organizational structures. ERP implementation affects how organizations structure and manage Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 26 the information and presents challenges in personnel recruiting, training and retention. 4. IT adoption, use and impact. ERP systems are widely adopted and continue to proliferate. Questions remain regarding how effectively and extensively the systems are used in organizations. Effects of these systems are experienced at several levels of analysis including individual, process, organization, and industry. 5. Integration. Integration issues include the relationship of ERP to organizational restructuring around IT capabilities, structural changes in IT resulting from the outsourcing of systems development and programming and the increasing reliance on third parties of products and services, and the effectiveness of ERP system compared with other alternatives, such as data warehousing, middleware and looser integration strategies. CHANGES SINCE SNELLER’S STUDY The 1986 study of MRP implementation by Sneller made an important contribution to the literature, but factors changed with the development of ERP systems. 1. The level of analysis of CSFs changed from the sub-organization level to the organization level. 2. The very nature of ERP encompasses the entire organization where MRP primarily affected the material management and production and inventory management sub-organizations. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 27 Sneller concluded his work on MRP with the observation that, “There appears to be a lack of good old fashioned discipline in the implementation approaches used for projects that were unsuccessful. American management has become very undisciplined as society itself has become undisciplined.” (Sneller, 1986) As American industry has improved its global competitiveness during the nineties, have the values of classical management been a factor? The IT community of professionals now has over 15 years experience in implementing complex systems since Sneller studied MRP. Why are we not more successful in obtaining results with ERP systems? Has organizational learning been offset by the increasing complexity of systems implementations? Future Enterprise Systems. Brown and Vessey (2003) view ERP as the first wave of a series of enterprise systems projects to be followed by customer relationship management (CRM) and supply chain management (SCM). They believe that the lessons learned in ERP implementations will enable management to better manage risks of the next wave of enterprise systems. The second wave of ERP is discussed more fully in the next chapter. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. CHAPTER II REVIEW OF LITERATURE OVERVIEW In this chapter the literature relating to the following topics is examined. • The evolution of ERP • The applicability of the functions of management theory to the implementation of complex systems • Success measurement While practitioner literature on ERP abounds, academic literature is sparse. Practitioner literature, while rich in observations and anecdotes, generally lacks the rigor of empirical research. Where specific ERP literature is not available, general management information literature is examined. MRP, MRP II AND ERP—AN EVOLUTION ERP systems evolved from material requirement systems first developed in the 1960s. 28 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 29 Figure 11-1 Evolution of ERP Systems Evolution of ERP S^stems UUOsI RP1I 1 l»JOs 1 y«()s MRP II | ]% 0 i hjvuU or^ongo^gdM B gsJ Adapted from (Rashid, Hossain, & Patrick, 2002). Material Requirements Planning (MRP) Computer applications for business were first developed in the mid 1950s. These first systems were stand-alone applications. The first applications included payroll processing systems, general ledger systems, accounts payable systems, and inventory management systems. Each system involved its own logic, data and users. With these stand-alone systems it was impossible to coordinate information systems planning across business functions (Davenport, 2000). Business systems were described as “islands of automation (McKenny & McFarlan, 1982).” When new systems had something in common with existing Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 30 systems they were often loosely coupled, usually manually, rather than tightly integrated (Markus & Tanis, 2000). Data was often described differently in different functional systems. Attempts to combine data across various systems were difficult and error-prone. Material requirement planning systems were first developed in the 1960s to help manufacturers produce the right part at the right time with a minimum investment in inventory. Manufacturers had used inventory as a buffer to keep from running out of product that is needed to meet customer demand. The combined result of buffers at all levels of production cause inventory investment to increase dramatically. Not only did this increase in inventory put demands of the firm’s cash flow to support the investment, but also made the firms more vulnerable to write-offs resulting from inventory obsolescence. APICS, the professional society that has promoted the adoption of MRP and ERP systems and provided user education, describes MRP as follows. “A set of techniques that uses bill of material data, inventory data, and the master production schedule to calculate requirements for materials. It makes recommendations to release replenishment orders for material. Further, because it is time-phased, it makes recommendations to reschedule open orders when due dates and needed dates are not in phase. Time-phased MRP begins with the item s listed on the MPS and de te rm in e s (1) the quantity of all components and materials required to fabricate those items and (2) the date that the components and material are required. Time-phased MRP is accomplished by Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 31 exploding the bill of material, adjusting for inventory quantities on hand or on order, and offsetting the net requirements by the appropriate lead times (Cox & Blackstone, 1998).” MRP works backward in time from the planned quantities and due dates for each end product as specified in the master production schedule. Using the bills of material to determine the sub-components for each final product, MRP systems determine planned production order release dates and quantities and planned material requisition requirements, taking into account existing inventory on hand and on order, and production orders in process (Sneller, 1986). The process begins with the production plan expressed in units by product lines. This plan is based on the overall level of manufacturing output the firm plans to produce. Once the production plan is approved it is converted into a master production schedule, which is a more detailed plan. The master production schedule is based on specific end products and takes into account the forecast, the production plan, product backlog, inventory on-hand, material availability, plant capacity, and management policies and goals. The master production schedule then becomes input to the capacity planning module. Both planned orders and orders already released for production are used in these calculations. This module converts production in units to production time for each work center required to build the products on the master production schedule. The output of this process is work center job Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 32 scheduling reports and purchasing requisitions for materials based on the time phased production schedule. Without MRP as a tool to time phase material requirements, materials may either arrive earlier than needed for production resulting in higher than necessary inventory levels or later than needed resulting in the inability to deliver the end product as promised to the customer. A properly operating MRP system minimizes inventory investment, while improving customer service levels. A major limitation of MRP systems is that unlimited capacity was assumed. The planned order release of work orders to the manufacturing floor did not take into account the capacity limitation of the work center and their machinery and labor availability. Manufacturing Resource Planning (MRP II) MRP II overcame some of the drawbacks of MRP. It provided finite capacity planning scheduling and shop floor control capability (manufacturing execution systems). MRP II includes more business functionality than MRP, dealing with sales, production, inventory, schedules, and cash flows. (Palaniswamy & Frank, 2000) APICS describes manufacturing resource planning (MRP II) as follows. “A method for effective planning of all resources of a manufacturing company. Ideally, it addresses operational planning in units, financial planning in dollars, and has a simulation capability to answer ‘what-if questions. It is made up of a variety of functions, each linked together: business planning, sales and Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 33 operations planning, production planning, master production scheduling, material requirements planning, capacity requirements planning, and the execution support systems for capacity and material. Output from these systems is integrated with financial reports such as the business plan, purchase commitment report, shipping budget, and inventory projections in dollars. Manufacturing resource planning is a direct outgrowth and extension of closedloop MRP (Cox & Blackstone, 1998).” Enterprise Resource Planning (ERP) Systems Changes in the manufacturing environment have made manufacturing planning and control systems, such as MRP II, less relevant. A move toward more customization is moving manufacturing from a make to stock environment to a make to order environment. The basis for competition is shifting from quality and cost to “delivery, lead times, flexibility, greater integration with the customers and suppliers, and higher levels of product differentiation (Palaniswamy & Frank, 2000).” “The emergence of standard hardware and software platforms coupled with standards for business data capture and exchange in the form of enterprise resource planning (ERP) systems have made powerful and robust business processes affordable to companies of all sizes (Severance & Passino, 2002).” APICS describes enterprise resource planning systems as follows: “ 1) A n a cco u n tin g -o rie n te d in form ation system fo r id entifying and planning the e n te rp rise w id e in form ation needed to take, m ake, ship, and a cco u n t fo r cu sto m e r orders. A n ER P system differs fro m the typical M R P II system in Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 34 technical requirements such as graphical user interface, relational database, use of fourth-generation language, and computer-assisted software engineering tools in development, client/server architecture, and open-systems portability. 2) More generally, a method for effective planning and control of all resources needed to take, make, ship, and account for customer orders in a manufacturing, distribution, or service company (Cox & Blackstone, 1998).” Donovan describes ERP systems as “quantum improvements over the old, rigid and often illogical MRPII systems. With today’s configurable and more flexible ERP systems there’s been a dramatic improvement in both the speed and ability to conform to logical, customer-oriented business processes.” MRP processes were “’hard coded’ with rigid, predefined business processes embedded in the software that were difficult to adapt to the real business needs.” In contrast many ERP products come “pre-packaged with multiple best practice options that management can choose from.” ERP capabilities provide the visibility and time links needed to manage the entire supply chain (ERP Systems Promise a Quantum Leap Over MRPII Systems, 1998). ERP software can result in a significant improvement over MRP and MRPII in the entire order-to-delivery process. Customers can be served at a lower cost and more predictability resulting in a competitive advantage to the firm. “Predictability means that the right inventory will be available, at the right time, to fill customer orders (ERP Systems Promise a Quantum Leap Over MRPII Systems, 1998).” Today’s more demanding customers insist on predictability. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 35 Technical Factors. Davenport (2000) identifies several technical factors that distinguish ERP systems from predecessor systems. These technical factors include modular construction, client/server architecture, configuration, common central database, and variable interfaces. Modular construction. ERP systems are a collection of application modules representing various business processes. SAP, a leading ERP systems vendor, includes the following modules in its SAP R/3 software: Table 11-1 Typical SAP Functions Financial Accounting Materials Management Treasury Plant Maintenance Controlling (financial control) Quality Management Enterprise Controlling (management Project Systems (project management) reporting Investment Management Sales and Distribution Production Planning Fluman Resource Management Advanced Planner and Optimizer Companies can install all modules or only the modules they select. Client may also substitute modules written by other software firms which fit their functional needs better than the comparable modules of their main vendor. Client/server Architecture. In this architecture, a server does some processing and a desktop personal computer (the client) does the rest. Large and complex ERP systems may require one server for application programs and another server for the database. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 36 Configuration. ERP systems are based on a standard set of business processes. Companies installing systems can configure the ERP system to meet their own business needs. Where the configuration options do not meet the needs of the company, the company must reengineer its processes to match the configurations available in the ERP systems. Common Central Database. A central database, shared by all modules, is a feature of ERP systems. While this feature is not new, in ERP systems it has reached the highest level of successful execution. Variable Interfaces. As global systems, ERP systems include interfaces that match the different countries in which firms operate. Typical ERP systems support currencies and local human resource requirements in most industrialized nations. ERP II Recently, the Gartner Group coined the term “ERP II” to describe a shift in ERP from an enterprise information base to moving information across the supply chain. “ERP II systems, then, are not just the backbone of the enterprise. They are also the information link for an enterprise in the supply chain ("Taking the Pulse of ERP," 2001).” The challenge of ERP II is first to accurately manage information about enterprise transactions and then to open up the system to trading partners. A PeopleSoft executive states, “Going forward, ERP is all about sharing information Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 37 and collaboration.” “ERP is no longer about your business, it’s about your supply chain,” states a J.D. Edwards executive ("Taking the Pulse of ERP," 2001). Brian Zrimsek, research director of the Gartner Group, identifies six key areas of difference between ERP and ERP II ("Taking the Pulse of ERP," 2001). Role. ERP attempts to optimize the enterprise. ERP II is concerned with supply chain optimization by collaboration with trading partners. Domain. ERP focuses on manufacturing and distribution. ERP II will cross all sectors. Function. Current ERP systems cross all industry segments and sectors. ERP II vendors will specialize in deep functionality for specific industries. Process. Business processes are focused within the four walls of the organization. ERP II will go beyond the four walls to business trading partners. Architecture. ERP systems are monolithic and closed. ERP II will be Web-based, “open to integrate and interoperate with other systems.” Data. ERP information is generated and consumed within the enterprise. ERP II information is available across the supply chain. Gartner does not expect to see ERP II systems fully deployed before 2005. OPERATIONAL PLANNING MODEL Koontz (1980) summarizes classical management theory in his systems approach to management. Inputs to the Koontz model include human, capital, management and technology. A “managerial transformation process” converts Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 38 these inputs into outputs, such as products, services, profits, satisfaction, and goal integration. The “managerial transformation process” consists of planning, organizing, staffing, leading and controlling. The process is supported by a communications system, which links the various elements to each other and to outside stakeholders and the environment (Koontz, O'Donnel, & Weihrich, 1980). Planning Koontz describes planning as a function that precedes all other management functions. Planning identifies the organization’s objectives and describes how the organization will attain these objectives. The other functions, organizing, staffing, leading and controlling, support the planning function (Koontz et al., 1980). The implementation of an ERP system is a massive task involving to some degree a large part of an organization’s employees. For a group effort such as this to be successful people must know what tasks they are expected to accomplish and when the tasks need to be completed. “Planning is deciding in advance what to do, how to do it, when to do it and who is to do it. Planning bridges the gap from where we are to where we want to go (Koontz et al., 1980).” Integration o f Information Systems Planning and Business Planning Teo and King (1997) investigate the integration between business planning and in form ation syste m s planning. Inform ation syste m s p lanning is the “process of establishing objectives for organizational computing and identifying potential applications that the organizations should implement (Teo & King, Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 39 1997).” “The linkage of IS plans with organizational objectives has been among the top problems reported by information systems (IS) managers and business executives (Reich & Benbasat, 1996).” Another research paper cited an A.T. Kearney study that demonstrated that firms that integrate business plans with information systems plans outperform those that do not (Das, Zahra, & Warkentin, 1991). Severance and Passino (2002) state that most executives do not understand the connection between modern business and technology and “leave technology compartmentalized within the l/T department with disastrous effects.” King (1978) recognized the importance of business planning (BP) and information systems planning (ISP) integration, seeing the integration as one directional only, flowing from business planning to information systems planning (King, 1978). King and Zmud (1981) later expanded the concept into a two-way integration (King & Zmud, 1981). Synnott (1987) develop five levels of integration: 1. “No planning: No formal BP or ISP. 2. Stand-alone planning: Presence of either business plan or IS plan but not both. 3. Reactive planning: IS function reacts to business plans and has no input in the BP process. 4. Linked planning: BP is ‘interfaced’ with ISP. Systems resources are matched against business needs. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 40 5. Integrated planning: BP is indistinguishable from ISP. They occur simultaneously and interactively (Teo & King, 1997).” With the high level of functional integration required in the adoption of ERP systems it is reasonable to conclude that the higher the level of integration of BP and ISP, the more likely the project is to succeed. Organizing Koontz et al. (1980) defines organizing as “the establishment of an intentional structure of roles through determination of the activities required to achieve goals of an enterprise and each part of it, the grouping of these activities, the assignment of such groups of activities to a manager, the delegation of authority to carry them out, and provision for coordination of authority and informational relationships horizontally and vertically in the organization structure.” Daft (2000) provides a simpler definition of organizing as “the deployment of organizational resources to achieve strategic goals.” Organizing encompasses such issues as organizational structure, delegation of authority, and staff versus line functions. The function of organizing is based in the foundations of management literature. Organizations arise out of the need for cooperation among people. Uncertainty in the environment reduces the level of cooperation (Barnard, 1938 & 1968). The adoption of an ERP system would cause uncertainty and thus reduce cooperation in the organization. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 41 Project Management Common organizational structures are based on functional areas, geographic areas, divisions, strategic business units or matrix organizations. Where tasks impact several areas of an organization the use of a project manager is frequently used to provide lateral coordination. Full time Project Leader The Sneller study examined the relationship between a full-time project leader and project success. At the time of this study, the systems literature was divided on whether a full time project leader with MRP systems experience was required. One view is that a user must head up the project team and that it must be a full time job (Wight, 1974). Another perspective is that, “The last thing (a Project Manager) really needs is some systems knowledge or technical knowledge. That is probably the least important of the skills needed in a Project Manager (Flosi, 1980).” Level o f Project Leader The reporting level and rank of the project manager are important factors in project success. The project manager needs the authority to make difficult decisions. Without decision-making authority, groups with vested interests in the affected process will either proceed very slowly or resist the project entirely. The project manager, with higher organizational position than personnel in the affected groups, may be more effective. Cisco Systems overcame organizational inertia only when its ERP project was “led by the CIO and the vice president of manufacturing, who reported directly to the board of directors (McAfee, 2003).” Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 42 Staffing Staffing is the management function that fills the roles within an organization with competent people who can operate the firm now and in the future. Staffing involves “effective recruitment, selection, placement, appraisal, and development of people to occupy the role in the organizational structures (Koontz et al., 1980).” Skills of Project Manager Current literature concerning the role of the project manager is more concerned with the business skills of the manager, rather than the manager’s information skills. Brown and Vessey (2003) found that to increase the likelihood of success, project leaders must be veterans who have already “earned their stripes” leading projects. Motivation of the project manager to succeed may be an important issue in ERP implementation. Firms can use either formal or informal reward to encourage its employees. Formal rewards can be structured to benefit individuals or groups, can be long term or short term and may include promotions. Informal rewards can include providing recognition or status for the successful project leader. The intrinsic satisfaction of the project manger or team members may also suffice as an informal reward (Maciariello & Kirby, 1994). T ea m m em bers. T eam m em b ers m ust have “deep busin e ss process knowledge and the power users from functional units on the team-must be among the best in the business, if not the best.” Also team members must be Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 43 empowered to make decisions for their business units or functions (Brown & Vessey, 2003). Training Lassila and Brancheau found that a positive initial experience for users of a new software package was important. Further, they found that a tendency to cut training and associated implementation cost in the adoption of commercial software packages could result in “negative user attitudes and a low-integration equilibrium.” They further found that “enhanced training on both the packaged systems features and related work processes” could be important factor in overcoming this problem. (Lassila & Brancheau, 1999) A study by Gartner Group indicates that 25% of the ERP budget should be dedicated to training users. (Coetzer, 2000) A study by Benchmarking Partners found that training averaged 8 percent of total project cost, but varied from 1 percent to 30 percent. (Wheatly, 2000) Kydd (1989) discussed that uncertainty and equivocality are often responsible for the failure in the development of new management information systems. (Kydd, 1989) Training is one of the IT tools to overcome both uncertainty and equivocality. Training should include the following major items: ❖ Basic manufacturing concepts > Computer literacy classes Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 44 > Soft skills classes - problem solving, decision-making, needs assessment ❖ ERP integration training ❖ Daily functionality classes (Kapp, Latham, & Ford-Latham, 2000) CIO John Conklin distinguished between training and education. “Education is all the why, who and where issues...Training is the how part of the equation.” Training programs typically concentrate on software-specific issues giving little attention to business process education. A lack of understanding of the linkage between such areas as sales order, manufacturing and accounting can be the source of post implementation problems. The CIO of a manufacturer states, “Everybody knew the keystrokes to do their job, but that was all. They didn’t understand the ERP process, the degree of integration and the importance of the data being right.” (Wheatly, 2000) A case study of an ERP system in a university demonstrated that user satisfaction with training quality is related to the user’s perception of ease of use of the systems and the efficiency and effectiveness of the system in doing their jobs (Lee & Bradley, 2004). This study is an empirical test of the Technology Acceptance Model (“TAM”). The TAM uses two variables, perceived usefulness and perceived ease of use, as determinants of user acceptance. The perceived usefulness is based on the observation that “people tend to use or not use the application to the extent they believe it will help them perform their job better (Davis, Bagozzi, & Warchaw, 1989).” Even if an application is perceived as Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 45 useful, it will only be used if it is perceived as easy to use, that is benefits of usage outweigh the effort of using the system. These two determinants result in user’s attitudes toward using the system, which in turn leads to the user’s behavioral intention to use the system. Lee (2004) demonstrates that training satisfaction by the ERP user is related to both determinants, perceived usefulness and ease of use. The Sneller (1986) study supported the significance to implementation outcomes of both (a) the level and quality of training and (b) the use of testing in conjunction with training. A case study of 12 manufacturing firms found that firms completing implementation projects on time and on/under-budget developed organizational change and training strategies in advance of the project and continually updated them during implementation (Mabert, Soni, & Venkataramanan, 2003). While many recognize the value and importance of training it “typically occurs at the end of the implementation cycle, when activities are often running late and being compressed.” Seventy-five percent of users polled at a seminar indicated that next time they would allow more time for training and would tailor the training around their own business processes (Wheatly, 2000). Consultants Consultants are frequently employed during ERP implementation projects. Davenport (1998) found that industry spends $10 billion per year for consultants to install ERP systems. Welti (1999), the manager of an implementation project Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 46 at ALVEO, a European manufacturer states, “The success of a project depends strongly on the capabilities of the consultants because the consultant is the only one with in-depth knowledge of the software. Hence good consultants have a major impact on the throughput time and the quality of a project.” This same project manager (Welti, 1999) defined the tasks and responsibilities of the consultant as follows: • “meeting deadlines • consulting, supporting, and training project group • creating, monitoring, and verifying implementation schedule • solving problems with specialists from SAP and the consulting company • configuring and customizing the system • providing quality assurance of the features implemented • documenting all activities” Despite the spending by industry and the experience of one practitioner described above, Sneller (1986) found no significant relationship between the use of consultants and implementation project success in MRP projects. The dilemma management faces with respect to consultants is described below. “On one hand organizations want to reduce the engagement of costly consultants, but on the other hand hardly any organization has the internal know le dge and skills to im p le m e n t an E R P system su cce ssfu lly w ith o u t external help. Choosing the right consultants and using their skills and knowledge appropriately, as well as transferring and retaining essential knowledge within the Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 47 organization becomes essential to the overall success of an ERP system implementation (Haines & Goodhue, 2000).” Leading Daft (2000) defines leadership as “the ability to influence people toward the attainment of goals.” Executive Support “Few nostrums have been prescribed so religiously and ignored as regularly as executive support in the development and implementation of management information systems (MIS) (Jarvenpaa & Ives, 1991).” Executive support has generally been regarded as critical to the development and implementation of management information systems. As early as 1968 Rockwell observed “a good MIS must begin at the top with the chief executive officer.” In 1985 Doll warned that, “information systems are just too important to leave development in the hands of technician (Jarvenpaa & Ives, 1991).” Kotter (1990) describes the role of the leader as coping with change, setting a direction for the organization and developing a vision of the future. “Major changes are more and more necessary to survive and compete effectively in this new environment. More change always demands more leadership (Kotter, 1990).” Much of the leaders work is accomplished by informal relationships, aligning people to create a coalition committed to the vision. The terms “executive participation” and “executive involvement” can describe executive support. Involvement describes a psychological state. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 48 Participation refers “to the behaviors and activities performed.” (Jarvenpaa & Ives, 1991) McKersie and Walton (1991) describe the role of top management in information technology as including the following: • “Set policy regarding where to introduce information technology and how to establish priorities for competing projects, • Develop understanding of the capabilities and limitations of IT, • Establish reasonable goals for IT systems, • Exhibit a strong commitment to the successful introduction of IT, • Communicate the corporate IT strategy to all employees (McKersie & Walton, 1991). Laughlin posits “the senior team must be involved in communicating business direction, allocating full-time and part-time resources, delaying initiatives that may create contention with implementation of the ERP application, and dealing with organizational resistance (Laughlin, 1999).” A case study of 12 manufacturing firms found a common characteristic of ERP project that finished on time and on/under-budget was the involvement of senior executives who also established clear priorities (Mabert et al., 2003). A survey of manufacturers by the same authors confirmed that the planning of education and training programs are “two of the significant individual planning variables common to successful implementations.” Champions Throughout literature on strategic uses of information technology is the idea of a champion for critical new systems. Champions are described as “more than ordinary leaders; they are more like transformation leaders who inspire Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 49 others to transcend self-interest for a higher collective purpose (Burns, 1978).” IT champions may be important to the implementation of information systems as a result of their ability to bring about organizational change. These managers vigorously promote their vision of IT and overcome hurdles in the authorization and implementation phases. “Successful champions can break down bureaucratic barriers and drive change through the organization while the firm’s competitors deliberate over the feasibility of an idea.” “Sponsors have the funds and authority to accomplish their goals, but champions, in spite of having less than the requisite authority or resources, bring about change in their organizations by using a variety of other influence processes (Beath, 1991).” In a different context of change, Drucker (1999) remarks about champions, “find somebody within the enterprise who really wants to new. As said before, everything new gets into trouble. And then it needs a champion. It needs somebody who says: ‘I am going to make this succeed,’ and who goes to work on it. And this person needs to be somebody the organization respects. This need not even be somebody within the organization (Drucker, 1999).” Brown and Vessey (2003) found that top management engagement includes serving as committed sponsors and champions of the projects. Change Management ERP implementations involve change in almost every area of business processes. Vendors include several options for configuring ERP systems based on best practices, but it is unlikely that all users will be using these options. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 50 Implementation inevitably causes major changes in an adopting organization, resulting in “resistance, confusion, redundancies and errors (Somers et al., 2001).” Appleton estimates half of the ERP implementation failures occur because companies “significantly underestimate the efforts involved in change management (Appleton, 1997).” The founder of a change management firm states that, “In fact, at least half the issues in ERP disasters are not technical but people related and culture related...the soft stuff is really the hard stuff (Wheatly, 2000 ).” McAfee (2003) describes inertia and resistance as two major pitfalls in the implementation of complex systems, such as ERP. He defines inertia as “lack of progress over time on implementation milestones and decisions, even after all parties have agreed that the effort is a good idea.” Factors contributing to inertia are the introduction of many new processes at once and the complexity of the processes being automated. Both of these factors are characteristic of ERP implementations. Resistance occurs when users are not in agreement about how or whether a project should proceed. Resistance arises when new business processes required by the project are a large departure from the current way of doing things. Resistance also can result from misalignment of incentives. “A m an u fa ctu rin g m a n a g e r w h o se e va luatio n d e p e n d s on m eeting produ ction targets may well oppose a large project that has the potential to disrupt output temporarily (McAfee, 2002).” Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 51 Brown and Vessey (2003) found that change management planning must go hand in hand with project planning. Change management must be “rigorously planned and generously resourced...Bringing about such extensive changes requires sharing the vision, gaining upfront buy-in, communicating often (and to everyone affected), and providing training on the new systems and business processes, via well-placed training programs.” Controlling Koontz (1980) defines controlling as “the managerial function of measuring and correcting performance of activities of subordinates in order to assure that enterprise objectives and plans are being accomplished. Daft (2000) defines organizational control as “the systematic process of regulating organizational activities to make them consistent with the expectations established in plans, targets, and standards of performance.” Management steering committees for information systems implementation projects have been a common method of control. These committees can be viewed as a method to get top management involved, ensure IS/BP planning fit, improve communication and change user attitudes toward IS. A typical steering committee includes the senior business unit manager, however, the “membership, chairmanship, reporting level, procedure, and frequency of meeting” may differ (Gupta & Raghunathan, 1989). In examining the impact of steering committees on information systems planning efforts in organizations, Gupta and Raghunathan (1989) found that “IS steering committees have a high Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 52 to medium impact on the majority of IS planning factors.” The impact was high in industries such as mining, wholesale trade and financial institutions and low in manufacturing and construction. This study also found steering committees have a significant impact on hardware integration, achievement of planned goals, integration of IS into business, and coordination of planning activities. The impact was much less for resource limitations for implementation, software systems integration, and the level of project planning details. (Gupta & Raghunathan, 1989) A study of 12 manufacturing firms found that steering committees with executive leadership were one of the characteristics of companies that stayed on-time and on/under-budget with their implementation projects. (Mabert et al., 2003) In his study of MRP systems implementation, Sneller found that a steering committee chaired by the senior business unit manager is positively related to implementation outcomes. The study also found that steering committees that meet at least every four weeks are positively related to implementation outcomes. The use of a formal tracking system by these committees was not supported. (Sneller, 1986) Welti (1999) views a capable and powerful steering committee “as absolutely crucial for a project.” He describes the duties of the steering committee as follows: • Assuming project ownership Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 53 • Monitoring project targets • Managing the implementation of project policy • Controlling project planning and progress • Enabling fast decisions • Deciding on organizational issues • Making resources available • Supporting the project manager • Motivating the management • Approving proposals from the project team" The ALVEO implementation project originally staffed its steering committee with middle management. The committee was unable to make decisions on “organizational matters, program changes or human resources.” With this organizational structure, top management was reluctant to intervene, as they had no direct stake in the project itself. After struggling with this steering committee for over a year, ALVEO restaffed the committee with top management resulting in a committee that assumed ownership of the project and gained appreciation of it’s importance to the organization. (Welti, 1999) SUCCESS MEASUREMENT Peter Keen posed five issues at the first meeting of the International Conference of Information Systems in 1980 that needed to be resolved to establish coherent research in the field of information science. The issue important to this study was “What is the dependent variable?” (William H. DeLone & McLean, 1992) How do we measure success in the information sciences? Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 54 DeLone and McLean reviewed 180 articles published between 1981 and 1987 and developed a taxonomy and model based on six dimensions of I/S success - systems quality, information quality, use, user satisfaction, individual impact and organizational impact. Systems Quality. The systems quality dimension includes measures of performance such as reliability, response rate, error rate and ease of use. Information Quality. The information quality dimension measures the perceived usefulness and importance of systems output, usually in the form of reports. Use. One of the most frequently used dimensions is use, describing the use of information by managers. User Satisfaction. User satisfaction is another frequently used dimension although it raises the question of whose satisfaction should be measured. A more recent study supports the case that user satisfaction is made up of five variables: content, accuracy, format, ease of use and timeliness. (Doll, Xia, & Torkzadeh, 1994) Individual Impact. Individual impact describes the effect of information on the behavior of the recipient is one of the most difficult dimensions to measure. Organizational Impact. The final dimension is organizational impact or the effect of information on organizational performance. The difficulty with measuring organizational performance is isolating the effects of the information Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 55 systems effort from other influences on organizational performance. (William H. DeLone & McLean, 1992) Hedman and Borell (2003) used the competing values model to examine how ERP systems affect organizational effectiveness. This model describes competing values in organizations in two dimensions, internal focus versus external focus, and stable structure versus flexible structure. The result is four interrelated models. (Quinn & Rohrbaugh, 1983) The human relations (HR) model has flexible structure and internal focus. This internal flexibility is used to build employee cohesion and morale. The open systems (OS) model is based on external flexibility. Organizational growth is gained by readiness and flexibility. The internal process (IP) model “focuses on internal stability and uses management, information processing, and communications to develop stability and control.” The rational goals (RG) model focuses on external control and “relies on planning and goal setting to gain productivity.” (Hedman & Borell, 2003) Hedman and Borell (2003) concluded that ERP systems strengths relate to the IP and RG models while ERP shortcomings are in the area of the HR and OS models. DeLone and McLean develop a model, shown in Figure X, to “reflect the interdependent, process nature of I/S success. Rather than six independent success categories, there are six /'nferdependent dimensions of I/S success.” (William H. DeLone & McLean, 1992) Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 56 Figure 11-1. Information Systems Success Model System Quality Use Individual Impact Information Quality Organizational Impact User Satisfaction From DeLone, W.H. and McLean, E.R. (1992). Information systems success: The quest for the dependent variable, Information Systems Research, 3, 1, pp. 60-95. DeLone and McLean caution that a researcher cannot arbitrarily select variables from each of these constructs to develop an overall I/S success measurement. “The selection of success measures should also consider the contingency variables, such as the independent variables being researched; the organizational strategy, structure, size and environment of the organizations being studied; the technology being employed; and the task and individual characteristics of the system under investigation (Weill and Olson, 1989).” (William H. DeLone & McLean, 1992) The DeLone and McLean model has proved very popular among IS researchers. In the period 1993 through mid-2002, “285 refereed papers in journals and proceedings” referenced the model (W.H. DeLone & McLean, 2003). DeLone and McLean cite two studies, Seddon and Kiew, Rai et al., which empirically tested and validated the model and many others that have implicitly tested the model. Markus and Tanis (2000) identify several problems in measuring success. They observe “a lack of consensus and clarity about the meaning of ‘success’ Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 57 where information systems are concerned.” Success can be viewed in terms of the implementation project, i.e., on time, on budget, or in terms of the business results. Success can also be view from different point of time, and from different points of view. Markus and Tanis divide ERP systems implementation into four phases: the chartering phase that includes > The Chartering Phase ■ Building the business justification for the project ■ Selecting the software package to be used ■ Identifying the project manager ■ Approval of budget and schedule > The Project Phase ■ Software configuration ■ Systems integration ■ Testing ■ ...
Purchase answer to see full attachment