THE IMPLEMENTATION OF ENTERPRISE RESOURCE PLANNING

The implementation of Enterprise Resource Planning



Abstract

We examined the relationships between the success of ERP system adoption, extent of business process improvement (BPI), and organizational performance and investigated the associations between the outcomes of these initiatives and such organizational factors as strategic intent, senior management support, and the status of the IT function within a company. A correlation analysis of 96 firms was made to test our hypothesis that the strategic intent to use ERP was closely related to the success of BPI, ERP, and organizational performance. The results also demonstrated that CEO-IT distance may have little direct bearing on the outcomes of ERP and BPI initiatives. A closer CEO-IT reporting relationship, however, was found to be associated with higher levels of senior management support for both types of enterprise projects. This empirical evidence reinforced the long-held assumption that organization-level benefits, BPI, and ERP success were closely related; and that these relationships were subject to the influence of the organizational variables.

Table of contents

Abstract2

Chapter 1: Introduction5

Chapter 2: Literature Review7

The evolution towards ERP7

Past studies12

The five-stage implementation process16

Research into enterprise resource planning17

The promise and pitfalls of ERP--why the implementation process matters22

Critical factors for successful ERP implementation24

Clear understanding of strategic goals24

Commitment by top management25

Excellent project management25

Organizational change management25

A great implementation team27

Data accuracy27

Extensive education and training28

Focused performance measures28

Multi-site issues29

ERP system selection31

The potential benefits of ERP and difficulties of assessment33

Organizational factors34

Interviews with ERP-using organizations35

The firm's objectives of ERP adoption35

Organizational issues for ERP adoption37

The research model39

Organizational performance40

ERP success41

The extent of business process improvement42

The interaction between BPI and ERP success43

Organizational factors43

Chapter 3: Research methodology46

Data source46

Survey instruments and measures46

Validity guidelines47

Data analysis methods48

Chapter 4: Analysis and results50

Chapter 4: Analysis and results50

Data collection50

Descriptive statistics50

Hypothesis testing53

A series of non-parametric tests (Spearman's rho and Kruskal-Wallis) were performed to test the hypotheses, the results are displayed in Table 4, Table 7 and Table 8, while a summary of them is shown in Table 6.53

ERP success, business process improvement and organizational performance53

Senior management support and CEO-IT distance54

Strategic intent for ERP54

Chapter 5: Conclusion57

Theoretical and managerial contribution58

Limitations58

Future research directions60

References63

Appendix A. Survey questions69

The implementation of Enterprise Resource Planning

Chapter 1: Introduction

Enterprise resources planning (ERP) systems allow seamless integration of information flows [6] and business processes [30] across functional areas within a company. They support information sharing along a company value chain and help to achieve operating efficiency. ERP packages offer a workflow engine to generate automated workflows according to business rules and approval matrices so that information and documents can be routed to operational users for transaction handling, and to managers and directors for review and approval [23].

Although ERP systems have been recognized as useful to many businesses while touted by vendors and consultants as systems that incorporate good business practice, ERP systems have often been found to fail to be effective [45]. One of the widely discussed issues is the need for an ERP-process fit involving some need for business and process changes. The relationship between business process change and successful ERP adoption is symbiotic: the benefit of ERP adoption often results in ...