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Managing the whole operation throughout the network requires

information technology (IT) solutions that can integrate both external and internal

information into readily available and usable forms. Many companies are using

information systems ( IS) solutions, for varied level of management hierarchy as

depicted in the Figure 1.1, to manage their business processes and to integrate all the

different operations in order to enhance information flow within the company as

well as collaboration with partners, suppliers and customers. Laudon and Laudon1

(2006)

That is the reason, during the latter part of 1990; firms have rushed to

implement Enterprise Resource Planning (ERP) systems. ERP means the technique

and concept for integrated management of business as a whole as a view point of the

effective use of management resources to improve the efficiency of enterprise

management.

Table 1.1 Technological, operational & business reasons for the acquisition of ERP

Technological reasons Operational reasons Business reasons

Desire to replace ageing IT infrastructure

Data visibility & integration To facilitate Globalization

Desire to outsource software maintenance & development

Improvement in managerial accounting & reporting

To facilitate merger / acquisition

Standardisation in technology used

To implement cost control & work flow automation

To adapt best practices built in with ERP

Resolution of Year 2000 problem

Improve customer service & new product development

To facilitate the implementation of BPR

Long term IT cost reduction

Unified reporting & increase reliability of information

To increase flexibility & agility in doing business

Need for adapting clean state approach for improved software system

Improve managerial decision making & operational efficiency

Pressure from value chain & need for electronic networking & collaboration.

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The organizations which have been implemented the ERP systems are

reaping benefits of having integrated working environment, standardized business

processes and achieved operational efficiency. There are technical, operational &

business reasons for the acquisition of ERP system by the business which is listed in

the Table 1 .1

In summary, ERP system promise to improve an organisation’s key

performance indicators such as proficiency, efficiency, profitability, customer

satisfaction and other measures of value.

On the other hand, the difficulties & high failure rate in implementing

ERP system have been widely cited in the IT literature (Davenport2, 1998,

Bhawarkar 3, 2012). ERP system are highly complex information system and the

implementation of these system is difficult and a costly process, placing tremendous

demands on corporate time and resources. Huang et al.4 (2004) point out that

although organisations spend millions on ERP packages and implementation

process, there is extensive evidence that they experience considerable problems,

particularly during the actual implementation.

Several failed ERP attempts are reported in the earlier studies, for

example:

� Unisource Worldwide, Inc., a $7 billion distributor of paper products,

wrote off $168 million in costs related to an abandoned nationwide

implementation of SAP R/3 software while FoxMeyer Drug, a former

$5 billion drug distributor, went bankrupt in 1996 and has filled a

$500 million lawsuit against SAP (Monk & Wagner 5, 2006).

� Dow Chemical, after spending half a billion dollars over seven years

of implementing SAP R/2, the mainframe version, decided to start all

over again on the new client/server version (R/3) (Soh & Sia6, 2004).

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Different organizations may implement the same ERP software in totally

different approaches and the same organizations may integrate different ERP

applications by following the same procedures. However, there are factors common

to the success or failure or ERP implementations regardless of the ERP systems they

implement and the methodologies they use. Hence most of the earlier researches on

ERP implementation focused on deriving critical success factors (CSFs) for

implementation. Though there are many CSFs available from earlier studies, still the

need for identifying delays are matter of concern. Recent survey held by a private

US consultancy service (Panorama consulting solutions7, 2012) , 2000 responses

from 61 countries, collected between February 2006 to May 2012, indicate 28% of

implementations finished on time & 11 % completed the project sooner than

expected. The consultancy said it is ‘distressingly common’ to see ERP projects

running so late (61% of the implementations).

ERP projects are likely to experience delay when organisations do not

realize that an integrated ERP software implementation is not an IT implementation

but a business transformation enabled by IT. The effort and money involved in the

ERP implementation is huge, most of the time the investor realizes in the middle of

the project that the decision to go in for ERP is not appropriate , but it is a tricky

situation and difficult to come out.

� Is there any method to identify the causes of these delays upfront,

before starting of the project?

� Which factors contributes more?

� Can it be measured up front before start of the project?

This research attempts to answer these questions. Identifying the factors

causing this delay is the focal point of this research.

These ERP projects exceed budgets and timeline expectations due to

many factors, including:

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� Not devoting knowledgeable resources to important project activities

like project planning, business case creation, design of new business

processes, testing of the processes in the new systems and training

the end users.

� The leadership that carried over by vendor sales pitches rather than

the system that truly fit for their future state requirements at the time

of selection of software.

� Leadership teams that fail to anticipate the magnitude of change

management.

� The project team, which focused mainly on the technical aspects of

the system at the time of training than the new processes and user

orientation.

� The knowledge gaps which include the following :

o the gaps between external vendor, consultants and internal

experts,

o the gaps between internal experts and end-users

o the gaps between end-users from different business units.

Most of the above points are focusing on people involved in the project,

hence a study of people involved in the ERP projects and their influence on success

or failure of the project is the first step in answering our question. Generally the

technical issues lead to only a small percentage of delay. Most of the contributions

are only by the people involved in the project. Detailed study on the key players

associated with the project is vital to overcome this delay.

Earlier studies reports that, there is lack of research that has focused on

the identification of CSFs from the perspectives of key stakeholders. The current

research is focused to address that gap, attempts to identify the success factors based

on the key players involved in the implementation. It seeks to contribute further in

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building relationship between key players & success of the project and also carry out

an empirical research in quantifying the delays due to these key players.

1.1 OUTLINE OF ERP INDUSTRY

ERP system research is regarded as a well-justified research area, as it is

found to have conceptual links with more or less every major area of information

system (IS) research Markus and Tanis,8 (2000). This section describe the concepts

of ERP in detail ; covering ERP overview, historical account, functional modules,

ERP as change process, Implementation strategies, implementation models &

measures, implementation methodologies, upgrades , implementation challenges,

critical success factors, ERP market & market dynamics and current trends

1.1.1 ERP Overview

ERP stands for Enterprise Resource Planning. Other common names

used are: Enterprise Information Systems (EIS), Enterprise Wide Systems

(EWS) or Enterprise Systems (ES). Enterprise systems are “commercial software

packages that enable the integration of transaction oriented data and business

process throughout an organization” Markus and Tanis8, (2000). Typically, ERP

systems are software packages composed of several modules, such as human

resources, sales, finance and production, providing cross-organization integration of

transaction based data throughout embedded business processes. These software

packages can be customized to the specific needs of each organization up to certain

limits (Esteves and Pastor9 , 2001) . ERP concept in terms of its historical

evolution, it relates to manufacturing and supply chain management. In the

literature there is a consensus that ERP are indeed expected to support the

enterprise's operations and provide its various levels of management with

information in a highly integrated manner. When integrated beyond the confines of

the individual enterprise with the systems of its business partners, such extended

ERP systems engender a vision of a network of value-creating processes cutting

across organizational boundaries. Nowadays, new terms have been proposed,

such as ERP II, and Enterprise Resource Management (ERM). The term ERP II

was created by Gartner Group and it is defined as “a business strategy and a set

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of industry-domain-specific applications that build customer and shareholder

value by enabling and optimizing enterprise and inter-enterprise, collaborative

operational and financial processes” (Bond et al10. 2000).

1.1.2 ERP Historical Account

The roots of ERP systems can be traced back to the Material

Requirements Planning systems (MRP) in the 70’s. These systems evolved to the

Manufacturing Resource Planning systems (MRPII). There are four phases in the

ERP systems history:

� The 1960’s - Most of the software packages were designed to handle

inventory based on traditional inventory concepts.

� The 1970’s - The focus shifted to MRP systems which translated the

master schedule built for the end items into time-phased net

requirements for the sub assembly, components and raw materials

planning and procurement.

� The 1980’s - The concept of MRP-II systems evolved, as an

extension of MRP to shop floor and distribution management

activities.

� The early 1990’s - MRP-II was further extended to cover areas like

engineering, finance, human resources, and distribution activities.

Hence, the term ERP (Enterprise Resource Planning) was coined.

Additionally, ERP systems add technology aspects to the overall system

requirements. These include features such as a client/server-distributed architecture

and Object Oriented Programming (OOP) development practices. Both of these

factors facilitate scalability. This scalability and their evolution towards including

supply chain and customer relationship management operations provide the

extension into customer and supplier environments. Hence the ERP II came

into existence. It addresses the integration of business processes that extend across

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an enterprise and its trading partners. ERP II forms the basis of internet enabled e-

business and collaborative commerce.

Later the cloud computing brings a sea change in the way companies use

technology. There are three basic categories of cloud computing: "infrastructure-as-

a-service" (the leasing of raw computing capacity), "platform-as-a-service" (the

leasing of computers ready for software development), and "software-as-a-service"

(the hosting of applications for users). When it comes to cost, reliability, and

security, the cloud promises to equal or better than on-premise computing.

1.1.3 ERP Functional Modules

Table 1.2 Evolution of ERP to ERP II

Basic ERP(1990-99) Extended ERP(2000-05) ERP II(2005 onwards)

� Materials planning

� Order entry

� Distribution

� General ledger

� Accounting

� Shop floor control

� Scheduling

� Forecasting

� Capacity planning

� E-commerce

� Warehousing

� Logistics

� Project management

� Knowledge management

� Workflow

� CRM

� HRM

� Integrated financials

� Portal capability

� Internet & WWW integration

� Cloud computing

The functions of ERP software should be divided into two parts: basic and

extended functions. Table 1.2 shown above depicts the modules available in basic

ERP, extended ERP & ERP II.

The basic function is essential for all ERP software as the "entry"

function, which emphasizes integrating all activities within the value chain.

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Extended function can make integration form upstream (suppliers) to downstream

(clients) of supply chain.

The integration of information system of back-end vendors belongs to the

function of Supply Chain Management (SCM). The integration of

information of front- end clients belongs to the function of Customer Relationship

Management (CRM), Sales Force Automation (SFA) and Electronic Commerce

(EC). The functions mentioned above are required functions of ERP software. In

addition, in view of the characteristics of different industries, the software

companies can adjust and supply some functions according to their own

understanding of ERP. Figure 1.2 shows the overall view of ERP modules.

Figure 1.2 ERP modules

1.1.4 ERP as a Change Process

ERP implementation supports Total Quality management (TQM) &

Business Process Re-engineering (BPR) and vice versa :

According to Revere11 (2004) and Light12 (2005), a typical ERP

implementation often involves some degree of business process re-engineering

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(BPR) and customisation. Arif et al.13 (2005), assert that if a company is not already

conducting business in the manner assumed in the ERP software package they

acquire, then the organisation must re-engineer its business processes and practices.

Therefore, BPR can be considered as a key practice in ERP implementation. Keller

and Teufel14 (1998) describe BPR as a pre-planning phase of ERP which can be

done by either ERP software vendors or consultants or organisations’ own in-house

team. ERP system analysts carefully examine the existing business procedures and

practices in order to propose IS solutions that aimed at introducing radical changes

to the business practices.

In BPR the goal is to replace the existing business processes with ones

that are much more effective for both the customer and the organisation itself.

Therefore, BPR can conceive as a technique for restructuring business operations to

achieve improvements. However, the technique is not new. BPR has deep roots in,

and was widely developed by, management consultancy companies in the 1990s.

Improvement of business operations can also be achieved through TQM or process

improvement, but with BPR the targeted improvements will be more significant and

radical.

Eardley et al.15 (2008) state that the aim of TQM or process improvement

approach is to streamline the process in the organisation’s value chain in order to

add value incrementally. Both TQM & ERP share similar goals- customer

satisfaction, productivity improvements, increased competitiveness, waste reduction,

effort duplication and so on. ERP systems will help in achieving these goals when

used in conjunction with TQM.

Hence ERP has a role of enabler of the TQM principles and philosophies.

ERP also benefitted by the implementation of TQM. Effective use of TQM creates

better performing ERP systems. TQM brings problem solving techniques and

continuous improvement opportunities for all ERP systems. The effective use of

TQM helps companies obtain the maximum return on investment (ROI) from

expensive investments Alexis Leon16, (2006).

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Abdolvand et al17. (2008) cautioned that inclusion of BPR in the

implementation of ERP adds considerably to the risk of implementation failure and

also expense of implementation..

1.1.5 ERP Implementation

ERP implementation is a complex and dynamic process, one that involves

a mix of technological and organisational interactions. According to Al-Mashari

and Al-Mudimigh18 (2003) implementing ERP systems in many instances caused

dramatic changes that need to be carefully administered to reap the advantages of an

ERP solution.

All ERP implementation goes through following three phases. Success or

failure depends on the activities carried out at each of these phases.

1. Selection phase, where requirement finalization, package & vendor

selection takes place.

2. Implementation phase, where the activities like Business Analysis,

Set up / Configuration, Conference room pilot. Customization,

Production set up, Data migration, Security profile, Readiness

assessment, Go live takes place.

3. Post implementation phase, where activities like Report

generations, Monthly / yearly closing, Refinement takes place.

There are different types of implementation as given below:

� Implementation for an existing company is called New

implementation,

� Implementation for a start up company is called Green field

implementation,

� Implementation of a first site/business for a Group company is

called Pilot implementation,

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� Implementation of the next sites for a Group company is called Roll

out implementation.

As per Esteves and Pastor10 (2001), the implementation phase of the ERP

lifecycle is the most widely researched area in the IS discipline. They associate this

focus with the difficulties of ERP implementations, and subdivide the ERP

implementation literature into four topics relating to implementation: case studies,

success, approaches, and other issues. In this paper, the ERP literature is reclassified

in terms of main project focus as implementation strategies; implementation

models and measures; implementation methodologies; ERP system upgrade;

implementation challenges and critical success factors (CSFs). These are discussed

in the following subsections.

1.1.5.1 ERP implementation strategies

There are multiple crucial decisions taken during ERP implementation

which are strategic in nature. These decisions are strategic decisions in ERP

because they: are normally adopted in organisations to support strategic objectives

of organisations; commit a large amount of organisational resources; have a long-

term impact on shaping the ERP system and/or organisation processes; are complex

because they spurn the entire organisation and involves different stakeholders (Lee

& Myers19, 2004). Figure 1.3 illustrates the ERP implementation phases generally

followed

Figure 1.3 ERP implementation phases. Source: Otieno. J21. (2010)

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Phase 1: Project Preparation - The purpose of this phase is to provide initial

planning and preparation for the ERP project.

Phase 2: Business Blueprint - The purpose of this phase is to achieve a common

understanding of how the company intends to run its business within the ERP

System. The result is the Business Blueprint, a detailed documentation of the results

gathered during requirements workshops. The Business Blueprint document

represents the business process requirements of the company. It is the agreed

statement of how the company intends to run its business within the ERP System.

Phase 3: Realization - The purpose of this phase is to implement all the business

process requirements based on the Business Blueprint. The system configuration

methodology is provided in two work packages: Baseline (major scope); and Final

configuration (remaining scope).

Phase 4: Final Preparation - The purpose of this phase is to complete the final

preparation (including testing, end user training, system management and cutover

activities) to finalize the readiness to go live. The Final Preparation phase also

serves to resolve all critical open issues. On successful completion of this phase, the

system is ready to run the business in the live ERP System.

Phase 5: Go Live and Support - The purpose of this phase is to move from a

project-oriented, pre-production environment to live production operation.

Every implementation differs and is unique because different

organisations will make different decisions based on their contextual factors. The

decisions taken by the ERP implementation project teams significantly influence

ERP implementation outcome. The basic decisions regarding physical scope, BPR

scope, technical scope, resource allocation and implementation strategy to be used to

implement ERP system is based on the following organisational characteristics:

� organisation size,

� complexity and structure,

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� available resources,

� attitude towards change

� other organisational characteristics.

Therefore, organisations intending to implement ERP systems need to be

aware of the trade-offs involved in making these important decisions in order to

minimise the risk of failure and to optimise their ERP implementation. For

illustration purpose, we discuss three main ERP strategies that can have profound

influence on ERP implementation outcome:

1. Enterprise suite vs. best of breed

2. Configuration vs. customisation

3. Big-bang vs. phased approach.

Organisations implementing ERP system must decide whether to

purchase all the ERP modules from a single vendor or to select ERP modules from

different vendors based on their particular needs. These two strategies are referred

to as enterprise suite and best of breed respectively.

Light13 (2005) states that both of these strategies are undoubtedly

complex due to their scale, scope and BPR requirements. Multi-vendor solution can

provide the best functionality for each module, but implementing it becomes more

complex because of the interfaces that need to be established. A single vendor

solution on the other hand may not have all the functionality required, but will be

easier to implement.

Similarly, organisations implementing ERP system must decide to either

adopt business processes embedded in ERP or to customise the ERP system to make

it suitable for the existing business processes. The former is referred to as

configuration while the later is referred to as customisation

Grabski and Leech20 (2007) state that configuration known as ‘Vanilla

approach’ can take the form of conscious redesigning of organisational processes

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and structures to accommodate the functionality of the ERP system accompanied by

substantial change management, to more piecemeal, evolutionary workarounds as

individuals adapt to the package and their practices become part of the new

organisational structure.

Therefore, the decision an organisation may take in response to each

‘misfit’ is the result of a process of interaction and negotiation among various

parties including management, users, IS personnel, and consultants. The nature of

‘misfit’ exerts a strong influence on whether the package structures would be more

likely to prevail (i.e. the organisation would adapt the package), or the organisation

structures would be more likely to prevail (i.e. the package would be customised via

addition of supplementary modules or modification of package code).

Once installed, there are several go-line or transition strategies available

but most of them are variants of four basic types: Big bang, Phased, Parallel and

Process Line. Also one more strategy called hybrid strategy, which is a combination

of the process line, phasing & parallel. Process-oriented implementations focus on

the support of one or few critical business processes. Out of the above four, most of

the time organisations are required to decide on big-bang or phased-in (modular) as

transition strategy. Otieno. J.21 (2010)

The big-bang implementation approach refers to a scenario where the old

system is discarded and all modules of the new system are introduced into each

business unit over a weekend. Nicolaou22, (2004). Although the big-bang approach

presents a number of advantages, as it does not require parallel running of legacy

and ERP software, it requires peak resource utilisation in a short period of time with

lower resources available to address problems for particular modules, thus

increasing the risk of total system failure. O’Leary23, (2000).

The modular implementation approach on the other hand refers to a

scenario where one module is implemented, and then it is run in parallel with the

legacy system until the output results are satisfactory (i.e. Reports and data).

Although this approach presents a minimal risk of failure, it leads to increased costs

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of ERP. It is imperative that organisations planning to implement ERP need be

aware of inherent trade-offs in different competing strategies so that they can make

informed decisions and boost their implementation outcome. The factors that could

cause a company to choose one transition strategy over another are technical

resource compatibility, number of users, consultant availability, structure of ERP

team, deadlines, reliability and hardware resources. Table 1.3 exhibits the

comparison of Big bang Vs Phased approach.

Table 1.3 Comparison of Big bang Vs Phased approach

Factors Big bang Phased/ modular

1. Overall cost Low High

2. Development of interface programs Low High

3. Implementation time frame Rapid High

4. Implementation risk High Low

5. Control of implementation High Low

6. Integration issues Low High

7. Detailed implementation planning Yes No

8. Resource needed at at point of time high Low

9. Recovery in failure difficult Fast

10. Consequence of failed implementation Very high Low

11. Flexibility in the implementation schedule No Yes

12. Implementation team turnover Low High

1.1.5.2 ERP implementation methodologies

A methodology is a roadmap to an implementation. The purpose of a

methodology is to deliver an implementation on time, according to specifications

and within the budget. Most vendors, especially in the software industry have

developed their own methodologies like “Accelerated SAP” (ASAP) from SAP.

Consulting companies also developed their own methodologies in relation to their

products like:

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� “The total solution” methodology from Ernest & Young

� “Fast track work plan” from Deloitte & Touche etc.

Vendors have gained experience and these methodologies have lived

through several years. Methodologies are detailed project plan that describes all

activities in the implementation. It includes the entire technical area to support

technical project management and address things like interfaces, data conversions &

authorisations, these things are applied and used by project managers and their team.

Table 1.4 given below gives a comparison of few known implementation

methodologies.

Table 1.4 Implementation methodologies

Methodologies Details

ASAP ( Accelerated SAP) by SAP AG

Provides examples , checklists or templates as samples

Five phases 1. Project preparation, 2. Business blue print, 3. Realisation, 4. Final preparation & 5. go-live and support continuous change

The Total solution by Ernest & Young

System re-engineering approach

Five components

1. The value proposition, 2. Reality check, 3. Aligned approach, 4. Success dimension, 5. Delivering value

The Fast Track work plan by Deloitte & Touché

Helps to achieve a rapid high quality business transformation

Five phases 1. Scoping & planning, 2. Visioning & targeting, 3. Re-design, 4. Configuration, 5. Testing & delivery.

Every vendor or consultancy organisations propose their own

methodology like:

� Oracle Accelerate,

� QAD’s Q –Advantage,

� SSA one point,

� Epicor’s Signature. etc

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1.1.5.3 ERP systems upgrade

One of the least addressed issues related to ERP software is the decision

to upgrade from one version to another. According to Microsoft’s support web

page, “An upgrade is a software package that replaces installed version of a product

with a newer version of the same product. The upgrade process typically leaves

existing customer data and preferences intact while replacing existing software with

the newer version” .

There comes a point in time when the existing system is deemed to have

served its purpose and is viewed more hindrance to progress than an enabler. With

the passage of time, a decision about what to do may be continually put off. The

opportunity to seek the benefit of a new or upgraded system is offset by the

distraction of the potential cost and effort. This delay may postpone the incidence of

changeover costs, but this is offset by the cost incurred through missed opportunities

associated with the enhanced functionalities. There are three options: upgrade,

refurbish or replace. Upgrade has the advantage that the people are familiar with

both the software & the vendor. Also an upgrade may be more quickly implemented

than a replacement. Otieno J. 21 (2010)

1.1.5.4 General ERP implementation challenges

The main challenges of an ERP implementation are as follows:

� Inadequate definition of requirements

� Resistance to change

� Inadequate resources

� Inadequate training and education

� Lack of top management support

� Unrealistic expectation of benefits & ROI

� Miscalculation of time and effort

� Technical complexity

� Poor communication

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� Software & business process incompatibility

� Poor project design and management

� Poor ERP package selection

� Integration issues

� Staff turnover

� Dynamic nature of the business

These challenges need to be addresses for the success of an ERP project.

Following are the some of the reports from earlier studies on this topic.

According to Berente et al.24 (2009), ERP creates many interconnections

among various business processes and data flows to ensure that any other unit of the

organisation can obtain information in one part of the business. Information that

was previously maintained by different departments must be integrated and made

available to the company as a whole. Business processes must be tightly integrated,

jobs redefined and new procedures created throughout the company. The whole

process of change is challenging and employees are often unprepared for new

procedures and roles. Laudon & Laudon1, (2006).

Berente et al24. (2009) argues that integration of existing stand-alone

information systems with ERP systems is a major problem for many organisations.

This is further complicated by the fact that ERP systems also seek to integrate

business processes in organisations which were previously function-based. Thus,

the process-orientation resulting from process integration is against the functional

differentiation which is common in traditional organisations. While client/server and

open systems solve some technical difficulties, there are still problems of integrating

different types of data and procedures used by functional areas.

Al-Mashari and Al-Mudimigh18 (2003) and Markus ad Tanis9 (2000)

states integration is often cited as a key goal associated with the implementation of

ERP.

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According to Lowe & Locke25 (2008), ERP systems are perhaps the most

complex and comprehensive of business information systems. ERP systems are built

on new powerful technologies that require very different skill sets than legacy

systems. Most large organisations still require use of large scale, main frame legacy

systems. Managers find it very challenging to manage the technological complexity

of different platforms and to harness the technological power of new enterprise

technology.

Many companies simply strive to complete the projects quickly for fear of

poaching by headhunting agencies and other companies. According to Gartner

Group, total cost of an outside SAP consultant is around $1600 per day. Going for

in-house SAP-trained technologists creates its own worries. Once the selected

employees are trained and after investing a huge sum of money, it is a challenge to

retain them, especially in a market that is hungry for skilled SAP consultants.

Employees could double or triple their salaries by accepting other positions.

Retention strategies such as bonus programs, company perks, salary increases,

continual training and education, and appeals to company loyalty could work. Other

intangible strategies such as flexible work hours, telecommunication options, and

opportunities are also being used. Skok et al.26 (2001).

As stated by Umble et al.27 (2003), ERP implementation is not just a

software project but an organisational change project. The projects call for co-

operation, teamwork, and planning for organisational change are difficult to do

when senior management is too busy to give the project adequate attention. The

introduction of any new technology may result in massive staff layoffs and morale

problems. The integration of departments leads to reduced need for many staff to

man operation hence leading to staff layoffs. The company may lack resources to

compensate employees over their job losses. Therefore, managers must anticipate

resistance to ERP systems, especially when combined to BPR (Laudon and Laudon1,

2006).

Laudon and Laudon1 (2006), argue that most managers are trained to

manage a product line, a division, or an office. Their argument is supported by Rishi

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and Goyal28 (2008). They are rarely trained to optimise the performance of the

organisation as a whole. However, Bingi et al.29 (2002) reports that enterprise

systems require managers to take a much larger view of their own behaviour, to

include other products, divisions, departments and even outside business firms.

Therefore, ERP systems must be developed and implemented over time guided by a

shared vision of objectives. According to Laudon and Laudon1 (2006), many

organisations find it very difficult to develop a shared, enterprise wide vision to

guide systems implementation.

Even though the price of prewritten software is cheap compared with in-

house development, Monk & Wagner5 (2006) observes that the total cost of

implementation could be three to five times the purchase price of the software.

Business processes are not static in a growing environment. The changes

emerged from opportunities, technological advantages and innovation in production

processes leads to the changes in the organisations business processes. This change

is continuous.. Hence it demands ERP software processes to be dynamic. In the

emergences of business over internet and virtual office environment we require

software which handles all processes over internet. Otieno J21 (2010).

1.1.5.5 Critical Success Factors

Concept of Critical Success Factor ( CSF ) was first proposed by in 1979

as “.. the limited number of areas in which results, if they are satisfactory, will

ensure successful competitive performance for the organization” . In response to the

above challenges, there has been a developing body of academic and practitioner

literature which addresses the difficulties of ERP implementation by proposing

Critical Success Factors (CSFs) of ERP implementation. Somers and Nelson30

(2001) created Unified CSF model which contains 20 CSFs, that unifies the set

studies made earlier by other authors and the CSFs are categorized in different

perspective like Strategic & Tactical as well as organization based & Technology

based. Later twelve commonly identified CSFs are consolidated by Bhatt31 (2005)

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for the success of ERP implementation project combining all the earlier studies

which are listed below:

1. Project management ( PM)

2. Business process re-engineering ( BPR)

3. User training & education ( UTE)

4. Technology infrastructure ( TI)

5. Change management ( CM)

6. Management of risk ( MoR)

7. Top management support ( TMS)

8. Effective communication ( EC)

9. Team work & composition ( TWC)

10. User involvement ( UI)

11. Use of consultants ( UC)

12. Goals and Objectives (GO)

Studies in ERP when compared to other research in the field of IS,

shows that theories on ERP systems implementation have been given less attention.

Esteves and Pastor10 (2001), Robey et al32., (2002). Most of the studies carried on

critical success factors areas lack theoretical basis that successfully link the critical

success factors to implementation outcomes of any kind. Besides, there is no

consensus on critical success factors owing to difference in context between

implementing organisations. Leopoldo and Otieno33, (2005).

1.1.6 Global ERP Market & Market Place Dynamics

The ERP market continue to benefit from the widespread acceptance,

Large businesses depend a lot on ERP, and every decision taken by them is solely

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based on information extracted by using ERP application. There is no business

domain that does not use ERP in today’s fast moving world, ERP plays a critical

role in controlling the flow of information throughout the company. Gartner34 (2013)

update shows CRM eclipsing ERP in worldwide market size in 2017. The following

graph compares the relative growth of CRM, ERP, Business Intelligence (BI),

Supply Chain Management and Web Conferencing, Collaboration/Social Software

Suites.

Figure 1.4 Worldwide Enterprise software revenue – 2010-17

Source : Gartner 34 (2013)

1.1.6.1 Market place dynamics

SAP continues to be the biggest player in the market, where as its market

share comes down drastically from 42% in 2006 to 25% in 2012 because of entry of

lot of small players stabilizing with its niche market offerings. Figure 1.5 shows the

market share of different players. Oracle stabilizes its market with its acquisition and

strategy to retain its customer with ‘application unlimited’ offering. The market is

still leading with five major players, SAP, Oracle, Sage, and Infor & Microsoft. ,

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Further, a comparison of nine most popular products ( SAP, Oracle,

PeopleSoft, JDEdwards, MFGPRO, SSA Global, Lawson, Epicor and Intuitive) are

compared and shown in Appendix – A in terms of its product offerings, key

capabilities & functionalities covered, technology used, industry solutions offered,

implementation methodology , market share, countries operated, no. of installations

etc.

1.1.6.2 The changing ERP market

ERP market research report by Panorama consulting solutions7, (2012)

shows a continuing tragedy in some areas, with new trends emerging in others. For

example, most projects still take longer than expected, cost more than expected, and

fail to deliver the expected business benefits. On the other hand, there are some

more positive trends as well. Cloud and SaaS ERP vendors continue to increase their

market share. As the technologies of e-business & ERP converge, effective ERP

systems will be a critical component for enterprise success. Extending the

transactions beyond the corporate walls to the web poses its own set of challenges

namely, maintaining transactions integrity and security to enable intelligent

collaboration between companies & their customers as well as suppliers.

The market is expected to see following changes:

� Mobility will redefine the manufacturing workplace: The

concept of constantly being connected from anywhere has pervaded

our personal lives and begun making its way into the manufacturing

environment. Now, through tablets, smart phones and other real-time

devices, manufacturers are completely connected and can see what

is occurring in their businesses from anywhere.

� Extended ERP will be king: . when an ERP solution is

comprehensive (for example, a combination of ERP, MIS, quality

management, ecommerce, accounting, etc. in one central system),

that will always trump a bolted together, third-party solution with its

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costly integration and customization requirements. The future does

lie in a single system – a single extended and comprehensive

solution.

� Cloud market share continues to increase, but on-premise ERP

systems still dominate. Although a majority of ERP

implementations still leverage traditional on-premise solutions, a

growing number are migrating to cloud ERP systems especially

among small and mid-size organizations.

1.1.6.3 Indian scenario

The competition among ERP Software vendors in India has become

fierce. SAP, Oracle, Microsoft dynamics have the dominant shares in the market

than local players like Ramco,3i InfoTech, Sage ERP, Godrej Info tech, Eastern

Software systems, Base information etc . Usage of ERP Software in India showing

a rapid growth. According to the experts, the ERP market in India is projected to

grow 13 per cent this year and revenues for the segment will reach $3.22 billion

despite challenging economic conditions. The Trend among all ERP Software

Vendors in India is the expansion of their software market for small to medium-size

business.

An increasing number of companies, especially small and medium

businesses (SMBs), are now looking at adopting ERP solutions on the software as a

services (SaaS) model for faster deployment and enhanced cost effectiveness.

Following are the salient points Indian ERP market analysis:

� Customers are moving from a best of breed to best for business

approach, they prefer extensions to their existing ERP like planning

and optimization, BI, Knowledge management etc.

� Competitive price points & higher returns on investments dictate the

choice. Indian players have a product that are cheap, can be

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implemented quickly, are flexible & need lower IT dependence and

support.

� Indian ERP vendors have a better understanding of the local

requirements like VAT and are in better position to provide solutions

with the right mix of functionality, technology & pricing.

� The computing hardware proposed by Indian players is much less

compared to MNC products which gives advantage to local players.

� Virtualization is another discernible trend. ERP vendor need to tailor

their software to the needs of specific industry verticals.

� IDC, a market research firm in India , recently stated that it has

"slightly downgraded" its expectations for the ERP market in India

due to a "continued mindset of caution and tactical investments"

among organizations in India.

� As customization is inevitable in the implementation of MNC ERP, it

created large business opportunity in India for developing resources

for ERP projects and later the resources are outsourced for other

country implementations.

1.1.7 Current Trend

ERP systems evolutionary process continues as standard ERP packages

are redesigned by vendors seeking to penetrate untapped markets and extend their

products to look beyond the four walls of the organisation - intra-organisational

integration Huang et al34. (2004) . The ERP vendors are now trying to fight for the

new generation of ERP systems and extend their market to companies in developing

countries, Small and Medium Sized enterprises, and different kinds of industries.

Davenport, whose academic writings on ERP crossover most readily to a

practitioner audience, observes that ERP is a prerequisite for operating in the 21st

century. Davenport2, (1998). We interpret Davenport’s perspective as quite powerful

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especially with the advent of web-technology which makes an ERP to a ‘must have’

application if an organisation needs to exploit advantages of e-commerce.

Web-based technology has brought in a new notion. In the last two years

or so, the Gartner Group has coined the current ERP systems as ERP II -the next

generation of ERP systems, which are based on collaborative principles .ERP has

acquired a new look by including more “front-office” functions, such as sales force

and marketing automation, Customer Relationship Management (CRM) and Supply

chain Management Systems (SCM).

With the advent of e-commerce, there were fears that ERP would rest in

peace. However, it is beginning to emerge that ERP is a prerequisite to a sound e-

commerce infrastructure hence the former is viewed as a supplement. Next section

gives much more details on this progress. ERP and e-commerce technologies

supercharge each other , the drivers behind ERP implementation are most likely to

focus on maximizing strategic flexibility and improving business operations by

reducing operational costs, enabling business integration, support customer

responsiveness, improving data visibility and making better business decisions. The

ERP market growth reflects a focus on innovation & regulatory compliance as listed

below:

� Service Oriented Architecture (SOA): The SOA architecture is

moving into the mainstream and will continue to be pervasive in all

new ERP systems in these years. Suites will become more

componentized, allowing deeper industry offerings and better business

process support.

� Cloud ERP: Unlike traditional ERP system, Cloud ERP provides

much more flexibility and ease of use without increase the cost of

setup. The companies need not purchase a license for every user that

uses the system. Instead, a company can simply pay a fixed amount

for the Cloud ERP license and then everyone can use the system. In a

nutshell, Cloud ERP is cost effective solution for small and medium

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sized businesses. The biggest advantage for deploying Cloud ERP is

that companies do not need to update their systems every time to get

new features and upgrades. Cloud ERP also provides better scalability

over managing a company’s data placed in the cloud. With the whole

data in the cloud, it is very easy for any company to move it anywhere

at any time without losing it.

� Focus on small business: AMR research too finds SMB to be the

linchpin of the ERP market. Globally the mid-range ( $50 m- $1bn in

annual revenue) and SMB ( less than $50 million in annual revenue)

market continue to be a major focus are for ERP vendors. Mid range

solutions and channels are critically important for penetrating China,

India, Eastern Europe & Latin America markets.

� Shift in revenue sources: The revenue sources for ERP vendors are

from License, Maintenance & professional services. ERP vendors

realize that maintenance revenue has been the growth engine of the

mature ERP market while professional services revenue has declined

because of multiples service providers.ERP vendors focus on

minimum level of attrition with lot of new strategies to retain their

existing customers

� Operating systems & Databases: Microsoft SQL server database

and Oracle database are the most preferred databases. A recent survey

reveals that most of the organizations looking for new ERP to be

deployed in Windows environment. The second choice in Linux

followed by a cloud or hosted environment. The cloud options appear

to be tempting due to its lower initial cost & avoidance of hardware

issues.

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� ERP & e-business integration: Beyond the core business functions

that ERP has traditionally focused on, e-business pushes the ERP from

the inside core of the companies to the network edge. A new extended

enterprise system emerges by integrating ERP with e-business, which

creates business that is more agile, more focused and more

competitive than traditionally structured business & tight B2B

connection. These technologies include, CRM, SCM, DW, DM,

OLAP, EDI, EFT, BI etc. More & more companies construct their

system architecture by integrating ERP systems with e-Business. They

use web based interface (Corporate portal) with outside entities plus

add-on modules such as CRM, SCM, etc. in the integration. Web

based extended ERP system will make the entire value chin powerful.

Examples of successful cases include SUN, IBM, Dell, Intel &

CISCO in the high tech industries; Amazon.com in the retail industry

and most of the banks in the financial services.

1.2 AIMS, OBJECTIVES & RESEARCH QUESTIONS

It is not a new phenomenon for IS researchers to determine a list of

critical success factors’ for IT-enabled project initiatives. Most recently, authors

have employed positivist research approaches to test the validity of these factors as

truly necessary conditions for implementation success and then predict the effect of

installed ERP technology on organisation performance. Research in this area

prioritises critical success factors in order to advice managers about which of the

factors are most critical for the organization Somers and Nelson35, (2001). This

observation ties with that of Kallinikos36 (2004) who observes that a managerial

outlook dominates the ERP literature, with its focus on successful ERP

implementation guidelines. The outcome of this is a number of non-industry-

specific CSFs that were introduced as aids to assist ERP projects Beard and

Summer37, (2004)

For example, the study by Umble et al27. (2003 has categorised the key

factors under 10 main points namely: clear understanding of strategic goals,

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commitment by top management, excellent implementation project management,

great implementation team, successful coping with technical issues, organisational

commitment to change, extensive education and training, data accuracy, focused

performance measures, and multi-site issues resolved. As noted by Robey et al32.

(2002), while these findings are useful in predicting the successful outcome of ERP

projects, they offer few insights beyond conventional wisdom because they do not

adequately explain why the investigated business outcome occurred. In light with

their observation, we argue that these studies are not without benefit because they

illuminate important issues for consideration and point to the complexity of software

project initiatives.

Hence this knowledge brought out from various studies does not help in

the prevention of damage or help the business community for assessment of the

situation before embarking themselves on the implementation project. Present study

aims on developing a pre-assessment model with the factors that can be measured

upfront before start of the implementation. Those factors are people related factors

as explained in section 1.1., which causes delay on the implementation.

1.2.1 Research Rationale

This ERP research is justified at this stage because of the following reasons:

� As the business models are rapidly changing and evolving to a new

dimensions, there is a requirement of continuous change in the ERP

product offerings, implementation methodology and support

provisions are inevitable.

� Despite the promises and the continued popularity of ERP Systems,

evidence is accumulating to demonstrate that obtaining benefits from

an ERP is not as straightforward as those selling and promoting such

systems would like us to believe (Boersma and Kingma38, 2005).

� There is very limited empirical research on ERP implementation

focused on developing countries.

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� Earlier studies and models developed based on the experiences of

developed countries; hence there is an opportunity for fresh extensions

of existing theoretical paradigms and sometimes development of

entirely new and different research frameworks based on developing

countries.

� Three pillars of ERP implementation projects are process, people and

technology infrastructure, Sherry Finney and Martin Corbett44 (2007)

reports that, the most significant finding of their study is, the lack of

research that has focused on the identification of CSFs from the

perspectives of key stakeholders ( people).

� There is a need to support business community to take a decision on

ERP investment before starting the project. As explained earlier, the

failure rate of implementation is more than 50% and approximately

90% of the implementations are late or over budget. Implementing

these projects demand more organisations time & effort. Most of the

investors burn their fingers after entering into this exercise. Hence

there is a need for a tool to predict the delay & time frame of the

implementation upfront before starting the project.

1.2.2 Research Gaps

Very few studies cover the comprehensive list of people involved in the

projects; generally it takes into account top management, user, vendor, project team

and consultants. The most important user called Knowledge users are not taken in to

consideration by any of the earlier studies on stakeholder analysis research.

In fact there are three groups of people involved in these projects. User

Group, Internal support group and External support group. ERP implementation is a

change-process. There are number of barriers that can slow down the progress of

this change process or even stop it altogether. One of the barriers that is most

difficult to overcome centers on the attitude and behavior of the people who are

affected by the change. Change management is a very important activity in the

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ERP implementation process. The user group is the one of the influencing groups,

which will be affected more in the ERP implementation change management

process. There are three types of users viz, (i). Transaction-users, (ii). Knowledge-

power-users, (iii). Positional-power-users.

The attitude and behavior of these users depend on the power they are

authorized and their perception on the effect of change on them. Power is the ability

to control all types of resources, such as information, people, expertise, assets, etc.

Power does not rest with position alone. There is positional-power and knowledge-

power. The positional-power comes from official authority while the knowledge-

power is accrued over a period of time by an individual through the acquirement of

critical knowledge related to organizational product and processes. As ERP focus on

process integrations, this knowledge-power-user plays a dominant role in the

implementation stages such as business analysis; ‘to be’ process design, conference

room pilot testing, data migration and post implementation. The transaction-users

are those who handle data entry or using the system for day to day transactions. The

expectation from these three users from the ERP system is different and the amount

of stake in the ERP success by each user type also different.

Chan et al.39 (2003) says that the lack of efficient interaction between the

involved knowledge owners may lead to the failure of ERP implementation. Kostas

and Kostas40 (2010) says that the ERP implementation is so knowledge –intensive

that the fate of the whole project is in the hands of a group of knowledgeable

employees within the organisation and the success of the project relies heavily upon

the effective management of knowledge into, within, and out of this team during

ERP life cycle. Above studies confirm the importance of knowledge owners but

there is a significant shortage of empirical research on this aspect. Hence there is a

need to conduct an empirical research in this area.

There are multiple studies Somer and Nelson35, (2004) ; Hein41, (2008) ;

Boo Young Chung et al.42 (2009) ; Stephen et al.43 (2010) which focused in

developing ERP implementation-models. These studies outlined comprehensive list

of people involved in the project, it takes into account top management, user,

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vendor, project team and consultants. These knowledge owners were not considered

in any of these studies.

Further, it is observed that most of the researches on ERP focused on

developing Critical Success Factors for implementations but little effort for

predicting success before start of the implementation or assessment of the situation

before embarking on the ERP implementation.

1.2.3 Research Questions

The research attempts to answer the following research questions:

� How the people involved in the ERP project influence ERP project-

success or failure?

� Can we create a benchmark based on key players’ involvement for a

more accurate forecasting model of the ERP system operation of a

company?

� How much delay is contributed by key players associated with the

ERP projects?

� How can we predict the time frame of the implementation before

starting the project?

1.2.4 Problem Focus

The main focus of this research is to identify the people related critical

success factors for the ERP implementation. The expected involvement of the

identified people can be measured through the framework suggested by this study

before starting the implementation. That will help to estimate the expected

implementation delays and predict the implementation timeframe as proposed in this

study which gives an assessment of the situation before embarking themselves on

the implementation project.

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The research aims are stated as:

� to exhibit readiness of the organisation for the change process of ERP

implementation

� to evaluate the team involved in the implementation process to effect

possible course correction.

� to minimize risk and save time & effort required for the

implementation.

1.2.5 Objectives

Against the backdrop of these aims are the following main objectives of this study:

� to prove that the people related factors are the key critical success

factors for the ERP implementation;

� to develop an ERP system success model based on people related

success factors;

� to propose a framework for the estimation of implementation delays &

time frame of the implementation based on people related success

factors.

1.2.6 Research Contribution

The research aims to make contribution towards the promotion of

contextually/culturally valid ERP implementation model. While investigating the

limitation of current implementation models with regard to contextual issues, this

research aims to enhance effectiveness of these models. Through merging theory

and empirical data from the field study organisation, the research seeks to refine the

existing models by proposing context sensitive model. The research also aims to

make a novel contribution by developing a frame work for the estimation of the

implementation delays and time frame of the implementation which will help to aid

the decision makers on the ERP investment.

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By reviewing literature on taxonomy of key players associated with the

implementation and exploring the theoretical frameworks for understanding their

behaviours, the study contributes to ERP practice by identifying what organisational

factors to look for when initiating ERP implementation and subsequent process

change - how individuals, ERP implementation and organisational change are

linked. The findings of the study can help the management of corporations to better

support the deployment of ERP in their organizations.

The findings of this research are expected to contribute towards ERP

implementation practice. The findings of this research are expected to be of

importance to various stakeholders. Given the complexity and integrated nature of

ERP and large investment involved it is imperative for organisations to study the

experiences of others, and learn from their practices and success factors Umble

et al.27 (2003) ; Leopoldo & Otieno33 (2005) . In this light, organisations planning to

implement ERP in developing countries can learn from the successes and failures of

the case study organisations and therefore, avoid pitfalls which can lead to ERP

project failures.

The research also presents avenues for continuing theoretical and

empirical research investigations in the field of IS, in particular ERP. By identifying

the impact of local context on IS, the research intends to create a better

understanding of the limitation technologically deterministic approaches that little

account of local conditions and high risks of strategies involved.

In general, this research would contribute towards a theoretical and

practical improvement

1.3 DISSERTATION OUTLINE

Each chapter of the dissertation is now briefly discussed, presenting

the key objectives and contents for each of the chapters in turn.

Chapter Two, Literature Review, investigates the relevant research

literature. It deals with concepts of information systems implementations, ERP

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systems, ERP systems implementation, Critical success factors, People related

factors, Prediction models for ERP implementation success.

Chapter Three, Theoretical Framework, explores current frameworks with

regard to information system success and ERP systems implementations. A number

of critical success factors exist in the ERP literature today. These frameworks are

evaluated and a new framework will be proposed as an aid to the research questions.

Chapter Four, Research Method, reports on the qualitative research focus

that this research project has taken. This chapter describes detailed methodology

followed to reach the culmination of research and explain the data collection process

and the respective analyses.

Chapter Five, Research Findings, reports on the findings from this

research project. The theoretical framework introduced in Chapter Three -

Theoretical Framework has been used to aid the research and all aspects of the

framework are assessed with an emphasis on the actual findings from the research

study.

Chapter Six, Summary and Conclusion attempts to show how the research

fits in to the existing body of literature in IS and how a contribution has been made.

The recommendations and key findings of the study, along with research limitations

of the study are also presented. This chapter revisits the research questions and the

theoretical framework and offers a summation of the research project, the conduct of

the research and its findings.

Appendices can be found after the reference list at the end of this

dissertation and are used extensively throughout this dissertation.

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