Critical Factors for Successful Erp Implementation

Critical factors for successful ERP implementation:

Exploratory findings from four case studies

Jaideep Motwani a,*, Ram Subramanian a, Pradeep Gopalakrishna b

a Seidman School of Business, Grand Valley State University, Department of Management,

401 West Fulton, Grand Rapids, MI 49504, USA

b Department of Marketing and International Business, Lubin School of Business, Pace University, New York, NY 10038, USA

Received 29 March 2004; received in revised form 14 December 2004; accepted 13 February 2005

Available online 21 July 2005

Abstract

As more and more organizations move from functional to process-based IT infrastructure, ERP systems are becoming one of

today's most widespread IT solutions. However, not all firms have been successful in their ERP implementations. Using a case

study methodology grounded in business process change theory, this research tries to understand the factors that lead to the

success or failure of ERP projects. The results from our comparative case study of 4 firms that implemented an ERP system

suggest that a cautious, evolutionary, bureaucratic implementation process backed with careful change management, network

relationships, and cultural readiness have a positive impact on several ERP implementations. Understanding such effects will

enable managers to be more proactive and better prepared for ERP implementation. Managerial implications of the findings and

future research directions are discussed.

# 2005 Elsevier B.V. All rights reserved.

Keywords: Case studies; Critical factors; ERP; Implementation

1. Introduction

The myriad challenges faced today by global

businesses are expected to grow in intensity and

complexity as we go further into this century. Expanded

global competition has become the norm rather than

the exception, with an unprecedented number and

variety of products available to satisfy consumer needs

and desires. In particular,many firms have implemented

company-wide systems called Enterprise Resource

Planning (ERP) systems, which are designed to

integrate and optimize various business processes such

as order entry and production planning across the entire

firm [1]. According to Davenport [2], the business

world's embrace of enterprise systems may in fact be

the most important development in the corporate use of

information technology in the 1990s.

When used appropriately, ERP software integrates

information used by the accounting, manufacturing,

distribution, and human resources departments into a

www.elsevier.com/locate/compind

Computers in Industry 56 (2005) 529-544

* Corresponding author. Tel.: +1 616 331 7467.

E-mail addresses: motwanij@gvsu.edu (J. Motwani),

subramar@gvsu.edu (R. Subramanian).

0166-3615/$ - see front matter # 2005 Elsevier B.V. All rights reserved.

doi:10.1016/j.compind.2005.02.005

seamless computing system. A successful ERP can be

the backbone of business intelligence for an organization,

giving management a unified view of its

processes [3]. Unfortunately, ERPs have a reputation

for costing a lot of money and providing meager

results, because the people who are expected to use the

application do not know what it is or how it works.

When ERP software fails, it is usually because the

company did not dedicate enough time or money to

training and managing culture-change issues. ''Faulty

technology is often blamed, but eight out of nine times,

ERP problems are performance related,'' says Pat

Begley, senior vice president of educational services at

SAP, an ERP software company in Newtown Square,

Pennsylvania [4].

Given the large financial commitment that an ERP

project requires and the potential benefits it can offer if

successfully implemented, it is important to understand

what is needed to ensure a successful ERP

implementation. There are two major objectives of

this study. First, using a methodology grounded in

business process change theory, this research reports

on a comparative case study of 4 U.S. firms that

implemented an ERP system. According to Tarafdar

and Roy [5], there has been no research that analyzes

and generalizes the characteristics and problems of the

ERP implementation experience, on the basis of a

systematic empirical study. Second, based on the

lessons learnt from the literature