...Critical Failure Factors in ERP Implementation Ada Wong The University of Hong Kong The University of Warwick, UK isada@business.hku.hk Patrick Y.K. Chau The University of Hong Kong pchau@business.hku.hk Harry Scarbrough The University of Warwick, UK Harry.Scarbrough@wbs.ac.uk Robert Davison City University of Hong Kong isrobert@cityu.edu.hk Abstract This study firstly examines the current literature concerning ERP implementation problems during implementation phases and causes of ERP implementation failure. A multiple case study research methodology was adopted to understand “why” and “how” these ERP systems could not be implemented successfully. Different stakeholders (including top management, project manager, project team members and ERP consultants) from these case studies were interviewed, and ERP implementation documents were reviewed for triangulation. An ERP life cycle framework was applied to study the ERP implementation process and the associated problems in each phase of ERP implementation. Fourteen critical failure factors were identified and analyzed, and three common critical failure factors (poor consultant effectiveness, project management effectiveness and poo555îr quality of business process re-engineering) were examined and discussed. Future research on ERP implementation and critical failure factors is discussed. It is hoped that this research will help to bridge the current literature gap and provide practical advice for both...
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...literature concerning ERP implementation problems during implementation phases and causes of ERP implementation failure. A multiple case study research methodology was adopted to understand “why” and “how” these ERP systems could not be implemented successfully. Different stakeholders (including top management, project manager, project team members and ERP consultants) from these case studies were interviewed, and ERP implementation documents were reviewed for triangulation. An ERP life cycle framework was applied to study the ERP implementation process and the associated problems in each phase of ERP implementation. Fourteen critical failure factors were identified and analyzed, and three common critical failure factors (poor consultant effectiveness, project management effectiveness and poo555îr quality of business process re-engineering) were examined and discussed. Future research on ERP implementation and critical failure factors is discussed. It is hoped that this research will help to bridge the current literature gap and provide practical advice for both academics and practitioners. Keywords: Critical Failure Factors, ERP Implementation, ERP Life Cycle. 1. Introduction An ERP system is an integrated software solution, typically offered by a vendor as a package that supports the seamless integration of all the information flowing through a company, such as financial, accounting, human resources, supply chain, and customer information (Davenport, 1998). ERP implementation is...
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...Enterprise Resource Planning and Systems Integration Cesar Campana, MMIS0627 Graduate Student, Nova Southeastern University School of Computer and Information Sciences September, 2011 Author Note Cesar Campana, Graduate Student, School of Computer and Information Sciences, Nova Southeastern University. Correspondence concerning this paper should be addressed to Cesar Campana, 2240 SW 50 Av, Fort Lauderdale Fl 33317. E-mail: cc1604@nova.edu Background Enterprise Resource Planning integrates internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application (Hossein, 2004). The ERP is “Web enabled”, meaning that they work using Web clients, making them accessible to all of the organization’s employees, clients, partners, and vendors from anytime and anyplace, thereby promoting the BU’s effectiveness (Motiwalla & Thompson, 2012). The fundamental advantage of ERP is that integrating the myriad processes by which businesses operate saves time and expense. Decisions can be made more quickly and with fewer errors. Data becomes visible across the organization (Vikki, 2010). The disadvantages comes from the tight budget organizations allocate to personnel training thus resulting inadequate use of ERP systems and poor testing and implementing of changes. The experience and skill of the...
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...How to Avoid SAP ERP Implementation Failure 1. Introduction Any company which is implementing an ERP either a small scale or large organizations is taking huge risk as they have to invest a lot of money and it is a time taking process with risks involved. Risks and issues are part and parcel of every major IT transformation project. When we place this in point of large transformation projects like SAP or Oracle these risks and issues can be huge which can collapse the entire project if not managed and monitored periodically. SAP frameworks have executed effectively more then 40000+ clients on the planet and most extend disappointments are not identified with the item or programming however basically attached to extend execution and the product usage accomplice. As defined by Rowe ERP as “ERP systems represent the implementation of old managerial dream of unifying and centralizing all the information systems into a combined one”. The existing techniques or process which is being followed during the implementation have failed so we need to be innovative by following the standard process. In this paper we would discuss about the problems while implementing an ERP and how to overcome those to implement it successfully. 2. Statement of the problem In the late 1990-2005 most of the companies which invested in ERP 50-70% of them have faced a huge disappointment and huge losses. . In a survey it is found that 56% of implementation costs over budget, average of that over budget is...
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...Advantages An ERP system can increase the organization's overall efficiency and effectiveness since all the parts within the ERP system are connected and integrated with each other. Subsequently, people may have faster access to the information so that it enhances facilitating decision-making. ERPS support the management of organizational interdependencies by enabling cross-functional information flows, language sharing and cognitive integration among functional units. Consequently, it may increase the organization's overall efficiency and effectiveness. Disadvantages The major impact of ERP systems on the organization is that they cause the organizational structure change. An ERP system requires the re-engineering of an organization's process and culture. A new ERP system may contribute to the redefinition of how organization actors communicate, what behaviors to sanction or reward and how people enact power, possibly being drawn upon in the day-to-day operations by all organizational members in order to make sense of and cope with organizational activity. Thus, it can be said that introducing an ERP system is to reproduce a new organizational structure. ERP Failure Top Management could not spent their precious time in order to get training about how to use ERP, so subsequently they faces lack of technical knowledge regarding ERP, so due to lack of resources spent and time allocated which is required for successful implementation, this results in failure of ERP. In order...
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...ON ERP Implementation-Procedures, Issues, Challenges & Failures Introduction An Enterprise Resource Planning (ERP) system is an integrated computer-based application used to manage internal and external resources, including tangible assets, financial resources, materials, and human resources. Its purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise-wide system environment. An ERP system can either reside on a centralized server or be distributed across modular hardware and software units that provide "services" and communicate on a local area network. The distributed design allows a business to assemble modules from different vendors without the need for the placement of multiple copies of complex and expensive computer systems in areas which will not use their full capacity. To be considered an ERP system, a software package should have the following traits: ➢ Should be integrated and operate in real time with no periodic batch updates. ➢ All applications should access one database to prevent redundant data and multiple data definitions. ➢ All modules should have the same look and feel. ➢ Users should be able to access any information in the system without...
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...enterprise-wide/ERP projects M ARY SUM NER School of Business, Southern Illinois University, Campus Box 1106, Edwardsville, IL 62026, USA The purpose of this study was to identify the risk factors in implementing traditional management information systems projects, describe the risk factors associated with enterprise-wide/ERP (enterprise resource planning) projects and identify the risk factors in ERP projects which are unique to these projects. Some of the unique challenges in managing enterprise-wide projects which were highlighted through the ndings included the challenge of re-engineering business processes to ‘ t’ the process which the ERP software supports, investment in recruiting and reskilling technology professionals, the challenge of using external consultants and integrating their application-speci c knowledge and technical expertise with existing teams, the risk of technological bottlenecks through client-server implementation and the challenge of recruiting and retaining business analysts who combine technology and business skills. Introduction In the past few years many organizations have initiated enterprise-wide/ERP (enterprise resource planning) projects using such packages as SAP, Peoplesoft and Oracle. These projects often represent the single largest investment in an information systems (IS) project in the histories of these companies and, in many cases, the largest single investment in any corporatewide project. These enterprise-wide/ERP projects bring...
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...Success and Failure Patricia Barton November 25, 2001 Table of Contents Introduction Factors Contributing to Failure ERP Success Stories Conclusion References Introduction What is Enterprise Resource Planning (ERP)? “Enterprise Resource Planning” is a term originally coined in 1990 by The Gartner Group to describe the next generation of MRP II software. The purpose was to integrate all facets of the business enterprise under one suite of software applications. The definition of ERP would be broadened to include almost any type of large integrated software package.[i][1] Webopedia provides a generalized definition of ERP as “a business management system that integrates all facets of the business, including planning, manufacturing, sales, and marketing.”[ii][2][iii] Some of the more well-known ERP software developers include SAP, Oracle, and PeopleSoft. This paper will look at both successful and unsuccessful ERP implementations and what contributed to their success or failure. Many lessons have been learned by failed ERP projects, as evidenced by the volume of information available. Many of the failures occurred in 1999, in an attempt to manage Y2K issues, which may suggest that the companies had pressing needs which forced the implementation. Apparently, late adopters are benefiting from the mistakes of their predecessors since the most current research describes successful implementations. What constitutes an ERP implementation failure? There are...
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...Enterprise Resource Planning (ERP) system Implementation-Procedures, Issues, Challenges & Failures An Enterprise Resource Planning (ERP) system is an integrated computer-based application used to manage internal and external resources, including tangible assets, financial resources, materials, and human resources. Its purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise-wide system environment. An ERP system can either reside on a centralized server or be distributed across modular hardware and software units that provide "services" and communicate on a local area network. The distributed design allows a business to assemble modules from different vendors without the need for the placement of multiple copies of complex and expensive computer systems in areas which will not use their full capacity. To be considered an ERP system, a software package should have the following traits: - Should be integrated and operate in real time with no periodic batch updates. - All applications should access one database to prevent redundant data and multiple data definitions. - All modules should have the same look and feel. - Users should be able to access any information in the system without needing integration...
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...An Enterprise Resource Planning (ERP) system is a highly complex system and is usually associated with high costs. The implementation is a long process and may take years to complete, furthermore, the process can be delayed and disrupted by inadequate planning and execution. It is not surprising that the biggest issue in ERP is the failure of a successful implementation. Hence, a company has to understand and consider the success factors of a successful implementation before deciding on implementing an ERP system. Top management commitment The support from top management is critical. An active and committed committee who are directly involved in the implementation process would remind their employees of the importance of the implementation of the ERP system, as compared to if it were delegated to other departments. The top management must also be willing to allocate resources for the implementation of the ERP system. The presence of strong leadership in implementing the system would aid in the employees’ acceptability of the new system in the future. Users’ acceptance will be discussed in the next point. The involvement of top management could be in the form of being in a steering committee as well. A steering committee is responsible for the organization’s operating policies and procedures. A good steering committee would try to solve all problems faced in the process of ERP implementation instead of diverting it to other departments. If this were the case, the problems will...
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...Resource Planning system or ERP has been adopted by a lot of companies. It is necessary to adopt an ERP system in order to maintain control of operations and to compete with other peers. Successful implementation of Enterprise Resource Planning system allows an organization to achieve business innovations and provide an integrated view of all business processes in an entity. However, an ERP implementation is very money costing and could be risky for all businesses; sometimes it is even more challenging for small businesses (Malhotra, Temponi, 2010). The number of companies that have implemented ERP systems and integrated with enterprise systems completely and successfully is limited. Integration between ERP and Enterprise Systems So, what is the difference between ERP and enterprise systems? ERP is actually business application software that offers solutions to different departments in a company as multifunction modules; whereas Enterprise Systems can include ERP, Supply Chain Management (SCM), Customer Relationship Management (CRM), etc. Enterprise Resource Planning software is implemented to enhance a company’s internal functions; whereas Enterprise Systems are implemented to better run the external functions and suppliers, customers and so on. Consequently, there is a necessity to well integrate ERP and Enterprise Systems. In recent years, many researchers and practitioners have considered the continuing development of enterprise resource planning (ERP) systems as one of the...
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...Q1. Drawing on the ideas of the IT systems failure types discussed in FIT3136Unit, analyse the failure of the ERP system described in the case article reported by Walter et al. (2011) in terms of: interaction failure, process failure, and correspondence failure. According to Lyytinen and Hirschheim (1987), there are three types of IT systems project failures such as correspondence failure, process failure and interaction failure. Correspondence failure Correspondence failure exists when an IT system does not meet its predefined business objectives set by senior management. It also can happen because senior management fails to prepare a realistic goal of the IT project in the beginning. ERP Systems are complicated, and implementing it may...
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...Accounting Information Systems Enterprise Resource Planning Table of Contents Introduction……………………………………………………………………..…3 History……………………………………………………………………………..4 Characteristics……………………………………………………………………5 Advantages………………………………………………………………………..6 Disadvantages……………………………………………………………………7 Success & Failures……………………………………………………………….8 Future……………………………………………………………………………...9 Conclusion……………………………………………………………………….10 Work Cited……………………………………………………………………….11 Introduction The 20th century has brought unparalleled breakthroughs and advantages for the world of business and commerce. Throughout all the changes, one thing has always remained constant, the desire to be the best and fastest organization for delivering products and information. There is constant struggle to develop strategies, ideas, software, programs and endless other activities to achieve this desired level of perfection. Every business wishes to be able to deliver the optimal service at the fastest times. The business process has remained relatively the same for generations. All business is separated into different components or areas of expertise. These are the processes that happen between the customer and the actual supplier. Until recently these different areas worked as silo operations. They are the division of enterprises into functional areas such that different activities occur in different parts of the enterprises. They are referenced to as stovepipes, for the fact the information stays with each enterprise...
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...Case Study ERP Implementation Failures ERP systems are an integrated software solution that is typically offered through a vendor as packaged software that supports the organization’s supply chain and other business functions, such as, receiving, inventory management, customer order management, production, planning, shipping, accounting, and human resource management. The use of ERP is very widespread across a multitude of industries. As a matter of fact, a report by Computer Economics Inc. states that, “76% of manufacturers, 35% of insurance and health care companies, and 24% of Federal Government agencies already have an ERP system or are in the process of installing one.” Over 60% of Fortune 1000 companies have implemented ERP systems (Hawkins & Stein, 2004). It is not just large firms that are implementing ERP systems, small and medium size companies are making use of ERP systems as well (O’Leary, 2004). ERP systems have expanded across the globe and many of world’s leading companies consider Enterprise Resource Planning (ERP) systems an essential information systems infrastructure to survive and prosper in today’s economy. There are many advantages to ERP systems. Companies that have successfully implemented ERP systems report improvement in management decision making, improvement in efficiency, improvement in information exchange, improvement in performance and productivity levels and improvement in customer service and customer satisfaction, just to name a few. So...
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...success of implementation of enterprise resource planning (ERP) systems as well as the variables associated with ERP project success. Specifically, relationships between dependent variables cost and budget performance on the independent variable overall project success are studied. Variables influencing cost and time performance are also explored. Design/methodology/approach – An analysis of secondary data obtained from the 2003 financial executives international comprehensive survey-based research on technology issues for financial executives. Multiple regression analysis and other statistical methods are used. Findings – The findings indicate that ERP implementations are generally viewed as moderately successful by top financial executives. In addition, both cost and time were significantly correlated with an overall view of success with cost performance holding higher influence. Several variables were found to significantly correlate with cost and time performance. Research limitations/implications – The study can be used as a basis for further exploration on the influences on ERP success as well as serve as a preliminary model to analyze any IT project success. Practical implications – The findings can be used to guide management teams in emphasizing control of the important variables in implementing ERP that influence project success. Originality/value – The paper provides a large sample set which empirically reviews major ERP implementations and their success perception. In addition...
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