Logo PTI
Polish Information Processing Society
Logo FedCSIS

Annals of Computer Science and Information Systems, Volume 8

Proceedings of the 2016 Federated Conference on Computer Science and Information Systems

Critical success factors for ERP implementation in SMEs

, , ,

DOI: http://dx.doi.org/10.15439/2016F37

Citation: Proceedings of the 2016 Federated Conference on Computer Science and Information Systems, M. Ganzha, L. Maciaszek, M. Paprzycki (eds). ACSIS, Vol. 8, pages 12431252 ()

Full text

Abstract. The highly competitive global environment of the last few decades has urged companies to rely on Information Systems (IS) in order to improve customer service, reduce costs and increase productivity. In that direction, Enterprise Resource Planning (ERP) systems are being used as significant strategic tools that provide competitive advantages and lead to operational excellence. Despite that, ERP implementation projects are complicated, costly and include high failure risks. The present study aims (a) to develop and (b) empirically test a conceptual framework that investigates the factors affecting ERP system effective implementation in Small and Medium Enterprises (SMEs). The examination of the conceptual framework was made with the use of a newly-developed structured questionnaire that was distributed to a group of Greek SMEs. After the completion of the research period, 159 usable questionnaires were returned. The reliability and the validity of the questionnaires were thoroughly examined, while research hypotheses were tested using the ``Structural Equation Modeling'' (SEM) technique. Results offer interesting empirical observations and managerial implications.

References

  1. C. Leyh, “Critical success factors for ERP projects in small and medium-sized enterprises-The perspective of selected German SMEs”, IEEE Federated Conference on Computer Science and Information Systems (FedCSIS), pp. 1181-1190, 2014.
  2. C. Spathis, and S. Constantinides, “Enterprise resource planning systems’ impact on accounting processes”, Business Process Management Journal, Vol. 10, No. 2, pp. 234-247, 2004, http://dx.doi.org/10.1108/14637150410530280.
  3. M. Łobaziewicz, “Integration of B2B system that supports the management of construction processes with ERP systems”, IEEE Federated Conference on Computer Science and Information Systems (FedCSIS), pp. 1461-1466, 2015.
  4. M.T. Tsai, E.Y. Li, K.W. Lee, and W.H. Tung, “Beyond ERP implementation: the moderating effect of knowledge management on business performance”, Total Quality Management, Vol. 22, No. 2, pp. 131-144, 2011, http://dx.doi.org/10.1080/14783363.2010.529638.
  5. H.R. HassabElnaby, W. Hwang, and M.A. Vonderembse, “The impact of ERP implementation on organizational capabilities and firm performance”, Benchmarking: an International Journal, Vol. 19, No. 4/5, pp. 618-633, 2012, http://dx.doi.org/10.1108/14635771211258043.
  6. P. Ifinedo, B. Rapp, A. Ifinedo, and K. Sundberg, “Relationships among ERP post-implementation success constructs: an analysis at the organizational level”, Computers in Human Behavior, Vol. 26, No. 5, pp. 1136-1148, 2010, http://dx.doi.org/10.1016/j.chb.2010.03.020.
  7. V.A. Mabert, A. Soni, and M.A. Venkatraman, “The impact of organizational size on enterprise resource planning (ERP) implementation in the US manufacturing sector”, Omega, Vol. 31, pp. 235-246, 2003, http://dx.doi.org/10.1016/S0305-0483(03)00022-7.
  8. P. Garg, and A. Garg, “Factors influencing ERP implementation in retail sector: an empirical study from India”, Journal of Enterprise Information Management, Vol. 27, No. 4, pp. 424-448, 2014, http://dx.doi.org/10.1108/JEIM-06-2012-0028.
  9. D. Zabjek, A. Kovacic, and M. Indihar Stemberger, “Business process management as an important factor for a successful ERP system implementation”, Ekonomska istrazivanja, Vol. 21, No. 4, pp. 1-18, 2008.
  10. S.W. Chien, H.C. Lin, and C.T. Shih, “A Moderated Mediation Study: Cohesion Linking Centrifugal and Centripetal Forces to ERP Implementation Performance”, International Journal of Production Economics, Vol. 158, pp. 1-8, 2014, http://dx.doi.org/10.1016/j.ijpe.2014.06.001.
  11. A.I. Nicolaou, and S. Bhattacharya, “Organizational performance effects of ERP systems usage: the impact of post-implementation changes”, International Journal of Accounting Information Systems, Vol. 7, No. 1, pp. 18-35, 2006, http://dx.doi.org/10.1016/j.accinf.2005.12.002.
  12. J.R. Muscatello, and I.J. Chen, “Enterprise resource planning (ERP) implementations: theory and practice”, International Journal of Enterprise Information Systems, Vol. 4 No. 1, pp. 63-78, 2008.
  13. D. Lee, S.M. Lee, D.L. Olson, and S. Hwan Chung, “The effect of organizational support on ERP implementation”, Industrial Management & Data Systems, Vol. 110, No. 2, pp. 269-283, 2010, http://dx.doi.org/10.1108/02635571011020340.
  14. Z. Zhang, M.K. Lee, P. Huang, L. Zhang, and X. Huang, “A framework of ERP systems implementation success in China: an empirical study”, International Journal of Production Economics, Vol. 98, No. 1, pp. 56-80, 2005, http://dx.doi.org/10.1016/j.ijpe.2004.09.004.
  15. S. Saini, S. Nigam, and S.C. Misra, “Identifying success factors for implementation of ERP at Indian SMEs: a comparative study with Indian large organizations and the global trend”, Journal of Modelling in Management, Vol. 8, No. 1, pp. 103-122, 2013, http://dx.doi.org/10.1108/17465661311312003.
  16. D. Zabjek, A. Kovacic, and M. Indihar Stemberger, “The influence of business process management and some other CSFs on successful ERP implementation”, Business Process Management Journal, Vol. 15, No. 4, pp. 588-608, 2009, http://dx.doi.org/10.1108/14637150910975552.
  17. R.D. Samuel, and S. Kumar, “Prediction of ERP Success before the Implementation”, in International Asia Conference on Industrial Engineering and Management Innovation (IEMI2012) Proceedings, pp. 219-227, 2013, http://dx.doi.org/10.1007/978-3-642-38445-5_22.
  18. E.J. Umble, and M.M. Umble, “Avoiding ERP implementation failure”, Industrial Management, Vol. 44, No. 1, pp. 25-33, 2002.
  19. J. Ram, D. Corkindale, and M.L. Wu, “Implementation critical success factors (CSFs) for ERP: do they contribute to implementation success and post-implementation performance?”, International Journal of Production Economics, Vol. 144, No. 1, pp. 157-174, 2013, http://dx.doi.org/10.1016/j.ijpe.2013.01.032.
  20. P. Garg, and A. Chauhan, “Factors affecting the ERP implementation in Indian retail sector”, Benchmarking: an International Journal, Vol. 22, No. 7, pp. 1315-1340, 2015, http://dx.doi.org/10.1108/BIJ-11-2013-0104.
  21. P. Garg, and D. Agarwal, “Critical success factors for ERP implementation in a Fortis hospital”, Journal of Enterprise Information Management, Vol. 27, No. 4, pp. 402-423, 2014, http://dx.doi.org/10.1108/JEIM-06-2012-0027.
  22. J. Ram, and D. Corkindale, “How “critical” are the critical success factors (CSFs)? Examining the role of CSFs for ERP”, Business Process Management Journal, Vol. 20, No. 1, pp. 151-174, 2014, http://dx.doi.org/10.1108/BPMJ-11-2012-0127.
  23. J.F. Rockart “A new approach to defining the chief executive’s information needs”, MIT Working Paper, CISR 37, No. 1008-78, 1978.
  24. R. Saade, and H. Nijher, “Critical success factors in enterprise resource planning implementation: a review of case studies”, Journal of Enterprise Information Management, Vol. 29, No. 1, pp. 72-96 , 2016, http://dx.doi.org/10.1108/JEIM-03-2014-0028.
  25. A. Boynton, and R. Zmud, “An assessment of critical success factors”, Sloan Management Review, Vol. 25, No. 4, pp. 17-27, 1984.
  26. P. Bingi, M.K. Sharma, and J.K. Godla, “Critical issues affecting an ERP implementation”, IS Management, Vol. 16, No. 3, pp. 7-14, 1999, http://dx.doi.org/10.1201/1078/43197.16.3.19990601/31310.2.
  27. K.K. Hong, and Y.G. Kim, “The critical success factors for ERP implementation: an organizational fit perspective”, Information & Management, Vol. 40, No. 1, pp. 25-40, 2002, http://dx.doi.org/10.1016/S0378-7206(01)00134-3.
  28. J. Motwani, R. Subramanian, and P. Gopalakrishna “Critical factors for successful ERP implementation: exploratory findings from four case studies”, Computers in Industry, Vol. 56, No. 6, pp. 529-544, 2005, http://dx.doi.org/10.1016/j.compind.2005.02.005.
  29. L. Li, C. Markowski, L. Xu, and E. Markowski, “TQM - A predecessor of ERP implementation”, International Journal of Production Economics, Vol. 115, No. 2, pp. 569-580, 2008, http://dx.doi.org/10.1016/j.ijpe.2008.07.004.
  30. S.W. Chou, I.H. Hung, and Y.C. Chang, “Understanding the antecedents of ERP Implementation success - The Perspective of Knowledge Transfer”, Asia Pacific Management Review, Vol. 18, No. 3, pp. 301-322, 2013.
  31. A. Amid, M. Moalagh, and A.Z. Ravasan, “Identification and classification of ERP critical failure factors in Iranian industries”, Information Systems, Vol. 37, No. 3, pp. 227-237, 2012, http://dx.doi.org/10.1016/j.is.2011.10.010.
  32. S. Wee, “Juggling toward ERP success: keep key success factors high”, ERP News, February, available at: www.erpnews.com/erpnews/ erp904/ 02get.html, 2000.
  33. A. Scheer, and F. Habermann, “Enterprise resource planning: making ERP a success”, Communications of the ACM, Vol. 43, No. 4, pp. 57-61, 2000, http://dx.doi.org/10.1145/332051.332073.
  34. T.W. Ferratt, S. Ahire, and P. De, “Achieving success in large projects: implications from a study of ERP implementations”, Interfaces, Vol. 36, No. 5, pp. 458-469, 2006.
  35. E.W.T. Ngai, C.C.H. Law, and F.K.T. Wat, “Examining the critical success factors in the adoption of enterprise resource planning”, Computers in Industry, Vol. 59, No. 6, pp. 548-564, 2008, http://dx.doi.org/10.1016/j.compind.2007.12.001.
  36. C. Sheu, B. Chae, and C.-L. Yang, “National differences and ERP implementation: issues and challenges”, Omega, Vol. 32, No. 5, pp. 361-371, 2004, http://dx.doi.org/10.1016/j.omega.2004.02.001.
  37. M. Tarafdar, and R.K. Roy, “Analyzing the adoption of enterprise resource planning systems in Indian organizations: a process framework”, Journal of Global Information Technology Management, Vol. 6, No. 1, pp. 21-51, 2003, http://dx.doi.org/10.1080/1097198X.2003.10856342.
  38. C.K. Lee, H.H. Lee, and M. Kang, “Successful implementation of ERP systems in small businesses: a case study in Korea”, Service Business, Vol. 2, No. 4, pp. 275-286, 2008, http://dx.doi.org/10.1007/s11628-008-0045-3.
  39. E. Bernroider, and S. Koch, “ERP selection process in midsize and large organizations”, Business Process Management Journal, Vol. 7, No. 3, pp. 251-257, 2001, http://dx.doi.org/10.1108/14637150110392746.
  40. Y. Yusuf, A. Gunasekaranb, and M.S. Abthorpe, “Enterprise information systems project implementation: a case study of ERP in Rolls-Royce”, International Journal of Production Economics, Vol. 87, pp. 251-266, 2004, , http://dx.doi.org/10.1016/j.ijpe.2003.10.004.
  41. P. Poba-Nzaou, L. Raymond, and B. Fabi, “Adoption and risk of ERP systems in manufacturing SMEs - a positivist case study”, Business Process Management Journal, Vol. 14, No. 4, pp. 530-550, 2008, http://dx.doi.org/10.1108/14637150810888064.
  42. P. Liamputtong, Focus group methodology: Principle and practice, Sage Publications, London, UK, 2011.
  43. B.L. Berg, H. Lune, and H. Lune, Qualitative research methods for the social sciences, Pearson, MA: Boston, USA, 2004.
  44. R. Sharma, and P. Yetton, “The contingent effects of management support and task interdependence on successful information systems implementation”, MIS Quarterly, Vol. 27, No. 4, pp. 533-555, 2003.
  45. M. Al-Mashari, “A process change-oriented model for ERP application”, International Journal of Human-computer Interaction, Vol. 16, No. 1, pp. 39-55, 2003, http://dx.doi.org/10.1207/S15327590IJHC1601_4.
  46. J.E. Umble, R.R. Haft, and M.M. Umble, “Enterprise resource planning: implementation procedures and critical success factors”, European Journal of Operational Research, Vol. 146, No. 2, pp. 241-257, 2003, http://dx.doi.org/10.1016/S0377-2217(02)00547-7.
  47. M. Al-Mashari, A. Al-Mudimigh, and M. Zairi, “Enterprise resource planning: a taxonomy of critical factors”, European Journal of Operational Research, Vol. 146, No. 2, pp. 352-364, 2003, http://dx.doi.org/10.1016/S0377-2217(02)00554-4.
  48. M.T. Somers, and K.G. Nelson, “A taxonomy of players and activities across the ERP project life cycle”, Information & Management, Vol. 41, No. 3, pp. 257-278, 2004, http://dx.doi.org/10.1016/S0378-7206(03)00023-5.
  49. S. Dezdar, and S. Ainin, “Examining ERP implementation success from a project environment perspective”, Business Process Management Journal, Vol. 17, No. 6, pp. 919-939, 2011, http://dx.doi.org/10.1108/14637151111182693.
  50. L.C.S. Koh, M. Simpson, J. Padmore, N. Dimitriadis, and F. Misopoulos, “An exploratory study of enterprise resource planning adoption in Greek companies”, Industrial Management & Data Systems, Vol. 106, No. 7, pp. 1033-1059, 2006, http://dx.doi.org/10.1108/02635570610688913.
  51. C.M. Jones, M. Cline, and S. Ryan, “Exploring knowledge sharing in ERP implementation: an organizational culture framework”, Decision Support System, Vol. 41, No. 2, pp. 411-434, 2006, http://dx.doi.org/10.1016/j.dss.2004.06.017.
  52. L.S. Jarvenpaa, and S.D. Staples, “Exploring perceptions of organizational ownership of information and expertise”, Journal of Management Information Systems, Vol. 18, No. 1, pp. 151-183, 2001, http://dx.doi.org/10.1080/07421222.2001.11045673.
  53. P.C. Ruppel, and J.S. Harrington, “Sharing knowledge through intranets: a study of organizational culture and intranet implementation”, IEEE Transactions on Professional Communication, Vol. 44, No. 1, pp. 37-52, 2001, http://dx.doi.org/10.1109/47.911131.
  54. H. Liang, N. Saraf, Q. Hu, and Y. Xue, “Assimilation of enterprise systems: the effect of institutional pressures and the mediating role of top management”, MIS Quarterly, Vol. 31, No. 1, pp. 59-87, 2007.
  55. E. Waarts, Y.M. van Everdingen, and J. van Hillegersberg, “The dynamics of factors affecting the adoption of innovations”, The Journal of Product Innovation Management, Vol. 19, No. 6, pp. 412-423, 2002, , http://dx.doi.org/10.1111/1540-5885.1960412.
  56. M. Bradford, and S. Richtermeyer, “Realizing value in ERP”, Cost Management, Vol. 16, No. 2, pp. 13-19, 2002.
  57. G.T.E. Wang, C.-L.C. Lin, J.J. Jiang, and G. Klein, “Improving enterprise resource planning (ERP) fit to organizational process through knowledge transfer”, International Journal of Information Management, Vol. 27, No. 3, pp. 200-212, 2007, http://dx.doi.org/10.1016/j.ijinfomgt.2007.02.002.
  58. S. El Sawah, A. Abd El Fattah Tharwat, and M. Hassan Rasmy, “A quantitative model to predict the Egyptian ERP implementation success index”, Business Process Management Journal, Vol. 14, No. 3, pp. 288-306, 2008 http://dx.doi.org/10.1108/14637150810876643.
  59. G.T.E. Wang, and F.H.J. Chen, “Effects of internal support and consultant quality on the consulting process and ERP system quality”, Decision Support Systems, Vol. 42, No. 2, pp. 1029-1041, 2006, http://dx.doi.org/10.1016/j.dss.2005.08.005.
  60. S.C.L. Koh, M. Simpson, J. Padmore, N. Dimitriadis, and F. Misopoulos, “An exploratory study of enterprise resource planning adoption in Greek companies”, Industrial Management & Data Systems, Vol. 10, No. 7, pp. 1033-1059, 2006, http://dx.doi.org/10.1108/02635570610688913.
  61. S. Dezdar, and S. Ainin, “The influence of organizational factors on successful ERP implementation”, Management Decision, Vol. 49, No. 6 pp. 911-926, 2011, http://dx.doi.org/10.1108/00251741111143603.
  62. J. Bradley, “Management based critical success factors in the implementation of Enterprise Resource Planning systems”, International Journal of Accounting Information systems, Vol. 9, No. 3, pp. 175-200, 2008, http://dx.doi.org/10.1016/j.accinf.2008.04.001.
  63. F.H. Nah, K.M. Zuckweiler, and L.S. Lau, “ERP Implementation: chief information officers’ perceptions of critical success factors”, International Journal of Human-Computer Interaction, Vol. 16, No. 1, pp. 5-22, 2003, http://dx.doi.org/10.1207/S15327590IJHC1601_2.
  64. E.J. Ettlie, J.V. Perotti, A.D. Joseph, and J.M. Cotteleer, “Strategic predictors of successful enterprise systems deployment”, International Journal of Operations & Production Management, Vol. 25, No. 10, pp. 953-972, 2005, http://dx.doi.org/10.1108/01443570510619473.
  65. A. Madapusi, and D. D’Souza, “The influence of ERP system implementation on the operational performance of an organizational”, International Journal of Information Management, Vol. 32, No. 1, pp. 24-34, 2012, http://dx.doi.org/10.1016/j.ijinfomgt.2011.06.004.
  66. T.M. Yeh, C.C. Yang, and W.T. Lin, “Service quality and ERP implementation: a conceptual and empirical study of semiconductor-related industries in Taiwan”, Computers in Industry, Vol. 58, No. 8-9, pp. 844-854, 2007, http://dx.doi.org/10.1016/j.compind.2007.03.002.
  67. A.V. Mabert, A. Soni, and A.M. Venkataramanan, “Enterprise resource planning: measuring value”, Production and Inventory Management Journal, Vol. 42, No. 3-4, pp. 46-51, 2001.
  68. H.C.C. Law, and T.W.E. Ngai, “ERP systems adoption: an exploratory study of the organizational factors and impacts of ERP success”, Information & Management, Vol. 44, , pp. 418-432, 2007, http://dx.doi.org/10.1016/j.im.2007.03.004.
  69. M. Gupta, and A. Kohli, “Enterprise resource planning systems and its implications for operations function”, Technovation, Vol. 26, No. 5-6, pp. 687-696, 2006, http://dx.doi.org/10.1016/j.technovation.2004.10. 005.
  70. K. Laframboise, and F. Reyes), “Gaining competitive advantage from integrating enterprise resource planning and total quality management”, Journal of Supply Chain Management, Vol. 41, No. 3, pp. 49-64, 2005, http://dx.doi.org/10.1111/j.1055-6001.2005.04103005.x.
  71. F. Hair, R. Anderson, R. Tatham, and W. Black, Multivariate Data Analysis with Readings, London: Prentice-Hall International, 1995.
  72. R.E. Schumacker, and R.G. Lomax, A Beginner's Guide to Structural Equation Modeling, New York: Routledge Academic, 2010.
  73. E.K. Kelloway, Using LISREL for Structural Equation Modeling: A Researcher’s Guide, Thousand Oaks, CA: Sage, 1998.
  74. B.M. Byrne, Structural equation modeling with AMOS: Basic concepts, applications, and programming. UK: Routledge, 2013.
  75. E. Ziemba and I. Kolasa, “Risk factors framework for information systems projects in public organizations-insight from Poland”, 2015 Federated Conference on Computer Science and Information Systems (FedCSIS), IEEE, pp. 1575-1583, 2015, http://dx.doi.org/10.15439/2015F110.
  76. P. Soja, “Understanding determinants of enterprise system adoption success: Lessons learned from full-scope projects in manufacturing companies”, Production Planning & Control, Vol. 21, No. 8, pp. 736-750, 2010, http://dx.doi.org/10.1080/09537281003601597.