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Examining ERP implementation success from a project environment perspective Shahin Dezdar

ERP implementation success 919

Institute for International Energy Studies (IIES), Tehran, Iran, and

Sulaiman Ainin Operations and Management Information Systems Department, Faculty of Business and Accountancy, University of Malaya, Kuala Lumpur, Malaysia Abstract Purpose – The purpose of this paper is to identify factors that are crucial for the successful implementation of enterprise resource planning (ERP) systems. Although there are many factors that influence the success, this study focuses on factors related to the ERP project environment, namely, project management, team composition and competence, and business process reengineering. Design/methodology/approach – The study was conducted using a survey questionnaire distributed to ERP users in Iranian organizations. In total, 384 responses were collected and analyzed. Findings – A significant relationship was found between project management and team composition with ERP implementation success. The better the project management activities the more likely the implementation will be successful. Likewise, the possibility of successful implementation is higher when the ERP team is more coordinated and experienced. Practical implications – ERP adopting organizations and managers could gain an understanding of the complexities inherent in ERP installations to avoid barriers and increase the likelihood of achieving desired results. The outcomes of this study are also useful to ERP vendors and consultants to prepare some strategies to overcome the misfit between their ERP products and ERP adopting organizations in developing countries. Originality/value – This study is one of the few that examine the success of ERP implementation from the perspective of key stakeholders (operational/unit/functional managers). It has contributed to academic research by producing empirical evidence to support the theories of critical success factors and ERP implementation success. The findings may be useful to ERP vendors and other organizations in other countries, as they could be used as a guideline for future ERP adoption and implementation. Keywords Iran, Business process re-engineering, Project management, Team working, Team composition, Team competence, Developing countries Paper type Research paper

1. Introduction An enterprise resource planning (ERP) system is an integrated software package used to manage an organization’s resources. ERP systems integrate all departments and functions of a company into a single computer system that can serve all the different departmental needs (Botta-Genoulaz and Millet, 2005). When ERP systems are used effectively and efficiently, they yield significant benefits, such as reduced inventory, faster information transactions, better financial management, tight supply-chain links, reduced transportation and logistic costs, improved responsiveness to customers, increased flexibility, increased productivity, and the groundwork for e-commerce,

Business Process Management Journal Vol. 17 No. 6, 2011 pp. 919-939 q Emerald Group Publishing Limited 1463-7154 DOI 10.1108/14637151111182693

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and make tacit knowledge explicit (Davenport et al., 2004). Nevertheless, in order to obtain these benefits organizations have to plan ERP implementation carefully. Many ERP projects have been delayed, reported as being over budget and have required additional funding (Zhang et al., 2005). In addition, the ERP system is perhaps the single largest IT investment an organization can make (Teltumbde, 2000). Therefore, it is important to understand which factors contribute to the occurrence of problems and identify ways to overcome them. Many researchers have tried to identify the factors leading to the successful implementation of ERP (Al-Mashari et al., 2003; Chien et al., 2007; Gargeya and Brady, 2005; Ifinedo, 2008; Kim et al., 2005; Nah et al., 2001; Yusuf et al., 2004; Zhang et al., 2005). They consider several factors, including organizational, user, and technical or cultural factors. Dezdar (2010) examines factors that affect ERP implementation success in Iran using an integrated model which includes the ERP project environment, the organizational environment and ERP system environment. The present study, however, focuses on factors that represent the ERP project environment, as Dezdar found these factors to be the most crucial to ERP success, particularly in the Iranian context. Consequently, the aim of this paper is to analyze factors (related to ERP project environment) that have an influence on ERP implementation in a developing country, namely Iran. A developing country has been chosen, because there has not been much research on ERP implementation in developing countries (Ngai et al., 2008; Sawah et al., 2008), particularly Iran. It is hoped that the findings will be useful to ERP vendors as well other organizations in Iran that are contemplating the use of ERP systems. This study is significant as it is one of the few that examine the success of ERP implementation from the perspective of key stakeholders. It also provides empirical evidence to support the theories relating to the critical success factors (CSFs) for ERP implementation success, particularly in terms of the ERP project environment itself. In the following sections, the theoretical framework and hypotheses that have been developed are presented. This is followed by the research methodology chosen to conduct the study. Next, data analysis is described and the findings are discussed. Finally, conclusions and implications for future research are highlighted. 2. Theoretical framework The theoretical framework (Figure 1) was developed based on the review of literature and findings from Dezdar (2010). Dezdar developed a model that illustrates CSFs for ERP implementation in Iran. His study shows that the ERP project environment is one of the main factors that ensure successful ERP implementation in Iran. In addition, a frequency analysis of ERP implementation CSFs from 95 journal articles in Dezdar and Sulaiman (2009) indicates that factors relating to the project environment, namely project management (PRM), ERP, team composition and competence (TCC) and business Project Management

Figure 1. ERP project environment and ERP implementation success

Team Composition & Competence Business Process Reengineering

H1 H2 H3

Source: Adapted from Dezdar (2010)

ERP Implementation Success

process reengineering (BPR), were the top four factors after senior management support. Hence, this paper focuses on these factors relating to the ERP project environment. The following paragraphs discuss these factors. PRM deals with diverse facets of the ERP project, such as planning, organization, information system purchase, employee selection, and monitoring of software implementation (Al-Mudimigh et al., 2001). Zhang et al. (2005) suggest that ERP PRM has five major parts: a formal implementation plan, a realistic time frame, periodic project status meetings, an effective project leader who is also a champion, and project team members who are stakeholders. Strong PRM is critical for ERP projects, including assigning responsibilities, controlling the scope, and defining and evaluating project milestones to avoid schedule and cost overruns. Nah et al. (2003) argue that the PRM process, which includes defining the scope, time and specification, is essential to ensure project success. The scope includes modules to be implemented and all tasks to be undertaken. The time factor includes the timeliness of the project including the critical path, deadlines and the milestones to be defined and considered. Specifications include all technical and non-technical issues to be considered. Umble et al. (2003) suggest that successful ERP PRM includes a clear definition of objectives, development of both a work plan and a resource plan, and careful tracking of project progress. As mentioned earlier, PRM, refers to the extent to which timetables, milestones, workforce, equipment, and budgets are specified. In addition, it refers to the ongoing management of the ERP implementation plan. Therefore, it involves not only the planning stages, but also the allocation of responsibilities to various players, the definition of milestones and critical paths, training and human resource planning, and finally the determination of measures of success (Nah et al., 2003). To attain the desired benefits, the ERP implementation project progress must be carefully managed and monitored through regular meetings and reports. The frequency of meetings has a direct impact on the effectiveness of ERP project control. Moreover, with regular meetings, the project manger is able to establish if there are any missed deadlines (Zhang et al., 2005). Consequently, the following hypothesis was developed: H1. Effective PRM is positively related to ERP implementation success. The second factor influencing ERP implementation is selecting the right project team and project manager. An ERP implementation project needs the cooperation of all departments within the organization. Accordingly, team composition and teamwork among the implementer and vendor/consultant are important, as emphasized by Nah and Delgado (2006). Huang et al. (2004) concluded that the team and its ability to work within the guidelines of a plan, communicate effectively, and work together are essential for the success of ERP implementation. Team members should be technologically competent, understand the organization and its business and come from the departments affected by the system. The ERP team should contain the best people in the organization and be cross-functional to reflect the cross-functional nature of ERP systems (Nah et al., 2007). Also important to ERP project success is the appointment of a project manager with the essential skills and authority. ERP project managers must have both strategic and tactical PRM qualifications. The project manager should be a high-level executive sponsor who has the power to set goals and legitimize change (Zhang et al., 2005).


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The technological and business proficiency of the team members is crucial for ERP project success. The ERP team should be balanced, cross-functional, and comprise a mix of external consultants and internal staff, so that the internal staff can develop the necessary technical skills for system implementation. The members of the ERP team should be expert in the organization’s processes as well as familiar with the best business practices in the industry (Nah et al., 2003). During ERP implementation, business users are responsible for ensuring that business process requirements are incorporated in the final software and that the ultimate ERP system is accepted and used by the end-users. Thus, adding business users to the project team to supplement technical resources is critical to project success (Somers and Nelson, 2004). It is also important that organizations empower the team to make rational decisions. In addition, the team members should only focus on the project and it should be their top priority (Nah et al., 2007). Accordingly, the following hypothesis was defined: H2. ERP TCC is positively related to ERP implementation success. The third factor, BPR is defined by Hammer and Champy (1993) as “the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical measures of performance”. Most organizations that implement ERP are not expected to have processes and structures that are well matched with the structure, tools, and types of information provided by the ERP system. For this reason, it is expected that organizations implementing ERP will have to reengineer, at a minimum, their main processes, to sustain the requirements of the ERP system. Yusuf et al. (2004) suggested that to take full advantage of ERP software, BPR is a prerequisite. Implementing an ERP system clearly changes the normal mode of operation within and between functions, and changes many social systems throughout the organization. The integrated environment of the ERP system requires the organization to conduct business in a different way. The appropriate implementation of an ERP system should force key business processes to be reengineered and cause a related rearrangement in organizational control to maintain the efficiency of the reengineering activities. As a result, enterprises should be willing to accept the embedded best practice, whenever possible, and model their business processes according to those represented by the ERP system (Murray and Coffin, 2001). ERP systems are built on best practices that are followed in the industry. However, inevitably, the software may not fit the working processes of an adopting firm. In such cases, the ERP software is either customized to fit the organization’s needs better or the organization must change its business processes to match the system (Bradford and Florin, 2003). Nah et al. (2003) argue that, as far as possible, the software should not be modified. It is the business that has to be changed and not the other way around. Muscatello and Chen (2008) support this line of argument and declare that organizations should be willing to change their businesses to fit the ERP software in order to minimize the degree of customization needed. ERP software should be changed as little as possible so as to minimize the possibility of errors and take advantage of newer versions and releases of the system (Murray and Coffin, 2001). BPR is important in the early stages from the initiation through the adaptation phase of the ERP implementation (Somers and Nelson, 2004). In the process of configuring the ERP system, a large amount of reengineering should occur iteratively to take advantage of the best practices offered by the system. Thus, the following hypothesis was defined:

H3. Business processes reengineering is positively related to ERP implementation success. A review of the literature (Dezdar, 2010) pertaining to ERP implementation success illustrated that basically success can be categorized into four perspectives: the ERP system, the ERP user (user satisfaction), the ERP project, and the ERP adopting organization, i.e. organisational impact. Based on a frequency analysis, Dezdar found that organizational impact and user satisfaction were the two most frequently used measures of implementation success. Therefore, the present study incorporates these two measures. A number of ERP implementation success studies have been conducted using the single success measure of user satisfaction (Grabski and Leech, 2007; Law and Ngai, 2007; Holsapple et al., 2005; Wu and Wang, 2007; Calisir and Calisir, 2004; Somers et al., 2003). User satisfaction is one of the most broadly used elements for evaluating information systems success with a sound uniform instrument. Somers et al. (2003) adopted the end-user computing satisfaction instrument developed by Doll and Torkzadeh (1988) to determine end-user satisfaction with ERP systems. They identified several reliable user satisfaction dimensions, including ease of use, content, format, accuracy, and timeliness. The first element assesses the user-friendliness of the ERP system. The remaining four aspects relate to the usefulness of the ERP software. The results of Somers et al.’s (2003) study confirm that the end-user computing satisfaction instrument maintains its stability when applied to users of ERP software. This research adapted the definition of ERP user satisfaction from Gable et al. (2008), as the sum of a user’s feelings and attitudes towards a variety of factors related to the delivery of information products and services, including being up-to-date, being precise, being comprehensive and so on. Most of the previous research on ERP has employed items such as presenting necessary outputs and reports and accurate information (Gable et al., 2008; Law and Ngai, 2007; Somers et al., 2003), providing output information content which is inclusive (Chien and Tsaur, 2007; Jones et al., 2008; Law and Ngai, 2007; Wu and Wang, 2007), offering output and reports in a useful format (Gable et al., 2008; Sedera et al., 2007; Somers et al., 2003), presenting up-to-date information (Chien and Tsaur, 2007; Jones et al., 2008; Law and Ngai, 2007; Wu and Wang, 2007), improving employee work efficiency (Calisir and Calisir, 2004; Gable et al., 2008; Gattiker and Goodhue, 2005; Ifinedo, 2008; Nah et al., 2007), and overall satisfaction with the ERP system (Bradford and Florin, 2003; Calisir and Calisir, 2004; Gable et al., 2008; Peslak, 2006). The second dimension of ERP implementation success is organizational impact. ERP organizational impacts relates to the effect of ERP system implementation and usage on the performance of the organization. Organizational impact refers to the realization of business goals and improved enterprise operating capabilities as a result of the ERP implementation. The perceived organizational impact variable covers both effectiveness and efficiency-based performance improvements in order to capture the business benefits of the ERP system (Stratman and Roth, 2002). Moreover, implementing an ERP system can lead to improvements in business performance by improving decision performance, being more responsive to customer requirements, reducing costs, and improving process efficiency (Somers et al., 2003). ERP systems combine a company’s system for managing its logistics, inventory, orders, shipping, customer service, sales, and several other parts. Integrating and standardizing these activities in line with the firm’s objectives has a positive impact on the enterprise and staff in enhancing effectiveness and efficiency and inevitably improving competitiveness. To measure


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the organizational impact of ERP system implementation, a wide range of measures have been employed by researchers, such as increased customer service and satisfaction (Kamhawi, 2008; Law and Ngai, 2007; Zhang et al., 2005), reduced organizational costs ( Jones et al., 2008; Kamhawi, 2007; Sedera et al., 2007), better use of organizational data resources ( Jones et al., 2008; Bernroider, 2008; Ifinedo, 2008), organizational-wide communication improvement (Ifinedo, 2008; Nah et al., 2007; Stratman and Roth, 2002), business processes rationalization (Gable et al., 2008; Law and Ngai, 2007; Sedera et al., 2007), improved overall productivity of the firm ( Jones et al., 2008; Sedera et al., 2007), and increased profitability ( Jones et al., 2008; Gattiker and Goodhue, 2005). This study adapted the organizational impact definition from Jones et al. (2008), as user perception of improved decision making, organizational communication, business process rationalization, customer satisfaction, cost reduction, and the firm’s overall productivity and performance. 3. Research methodology 3.1 Research design The aim of this study is to analyze factors (related to ERP project environment) that affect the implementation of ERP systems in Iran. The population for the research is organizations using ERP systems. Since there was no existing database of the ERP population, various sources of data were used, including the web sites of top international ERP vendors, web sites of top local information system vendors, web sites of Iranian governmental and non-governmental organizations that manage IT, and the annual reports of public listed organizations published by the Tehran Stock Exchange web site. Finally, a list of 31 ERP user companies was identified. A survey questionnaire was utilized to collect data from the companies identified. The questionnaire consists of five sections: Section A: PRM, Section B: team composition, Section C: BPR, Section D: ERP implementation success, and Section E: demographics. The items for Sections A-D were adapted from relevant prior research (Bradley, 2008; Kamhawi, 2007; Muscatello and Chen, 2008; Nah et al., 2007; Zhang et al., 2005). All items in Sections A-D were measured using a seven-point Likert-type scale with anchors ranging from “strongly disagree” to “strongly agree”. The items used in the questionnaire and the source of references for Sections A-D are provided in the Appendix. The questionnaire was translated into Persian, and then back-translated to ensure that the meanings were the same as in the original. To ensure the reliability of the questionnaire, a pilot study was conducted. The questionnaire was distributed to 54 operational managers and 37 completed questionnaires were collected. The data were tested using the SPSS 16.0 software package. It was found that all the variables’ Cronbach’s a values were above 0.7. Hence, the questionnaire was considered to be reliable, as suggested by Hair et al. (2006). As mentioned earlier, 31 organizations using ERP were contacted and asked to identify a liaison person who could distribute the questionnaire to all their operational/functional/unit managers who use ERP systems (562 in total). Operational/functional/unit managers were chosen as respondents because, as Bradford and Florin (2003) stated, they are among the most knowledgeable informants regarding ERP implementation projects in organizations. After repeated reminders, 411 completed questionnaires (73 percent) were collected. The questionnaires were reviewed

and 27 incomplete questionnaires were omitted. Therefore, 384 questionnaires were used in the analysis. 4. Findings This section begins by providing a descriptive statistical analysis of the respondents’ demographic profile. It then examines the impact of the factors on ERP implementation success, using structural equation modeling (SEM). The SEM analysis was carried out in accordance with a two-step methodology proposed by Hair et al. (2006). According to this procedure, after the model has been modified to create the best measurement model, the structural equation model can be analyzed.


4.1 Sample characteristics The characteristics of respondents are illustrated in Table I. There were more male respondents than female respondents. This reflects the Iranian workforce. The results indicate that more than two-thirds of respondents were between 31 and 50 years old and more than three-quarters of the respondents hold a university degree and have worked for more than six years in their organizations. In addition, the majority of respondents were involved fully or partially in the ERP implementation project. These figures show that the respondents have been using ERP, knew the organization business processes and the ERP implementation process and, hence, were the best informants to answer the survey questionnaire. 4.2 Measurement model Assessment of the measurement model included the evaluation of convergent and discriminant validity for each of the measurement scales. Convergent validity was assessed using three measures: factor loading, composite construct reliability and average variance extracted (AVE) (Table II). The total factor loadings of the items in the measurement model were greater than 0.70 and each item loaded significantly ( p , 0.01 in all cases) on its Item

Categories

Gender

Male Female Below 30 years old 31-40 years old 41-50 years old Over 50 years old Undergraduate Graduate Postgraduate (MS) Postgraduate (PhD) Less than three years Three to five years Six to ten years More than ten years Fully involved Partially involved Not involved

Age

Education

Employment with this organisation

Involvement in ERP implementation project

Frequency

Percent

328 56 43 111 150 80 88 184 97 15 36 61 112 175 153 204 27

85.4 14.6 11.2 28.9 39.1 20.8 22.9 47.9 25.3 3.9 9.4 15.9 29.2 45.6 39.8 53.2 7.0

Table I. Characteristics of the respondents

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Construct

Items

Factor loading

Composite reliability

AVE

Project management

PRM1 PRM2 PRM3 PRM4 PRM5 PRM6 TCC1 TCC2 TCC3 TCC4 TCC5 BPR1 BPR2 BPR3 BPR4 BPR5 SUC1 SUC2 SUC3 SUC4 SUC5 SUC6 SUC7 SUC8

0.822 0.831 0.750 0.849 0.857 0.822 0.825 0.824 0.833 0.819 0.776 0.829 0.846 0.831 0.740 0.811 0.739 0.815 0.813 0.780 0.823 0.758 0.813 0.844

0.777

0.721

0.761

0.681

0.794

0.691

0.887

0.672

926 Team composition and competence

Business process reengineering

ERP implementation success

Table II. Convergent validity test

underlying construct. The composite construct reliabilities were within the commonly accepted range, greater than 0.70. The average variances extracted were all above the recommended level of 0.50. Therefore, all constructs had adequate convergent validity and, hence, were retained, as recommended by Hair et al. (2006). To confirm discriminant validity, the average variance shared between the construct and its indicators should be larger than the variance shared between the construct and other constructs. The outcomes of the convergent validity test (Table III) indicate that constructs share more variance with their indicators than with other constructs. 4.3 Structural model The second stage of the SEM process involves testing the structural model prior to testing the hypotheses. The proposed structural model was examined using AMOS

Table III. Discriminant validity test

Construct

PRM

TCC

BPR

SUC

Project management (PRM) Team composition and competence (TCC) Business process reengineering (BPR) ERP implementation success (SUC)

0.849 0.56 0.44 0.63

0.825 0.47 0.59

0.831 0.40

0.820

Note: Leading diagonals represent the square root of the average variance extracted between the constructs and their measures, while off diagonal entries are correlations among constructs

16.0 software. The maximum likelihood method was employed to estimate all parameters and fit indices. SEM fit indices measure the extent to which the covariance matrix derived from the hypothesized model is different from the covariance matrix derived from the sample. Based on the results of the SEM fit indices, the proposed model provides a good fit. The normed x 2 was 2.368, which is below the recommended level of 3.0. The RMSEA was 0.071, which is below the recommended 0.08 cut off. The CFI was 0.922, which is greater than the threshold of 0.90. Overall, the hypothesized structural model provided an acceptable fit for the data. In addition, the SEM path results, standardized path coefficients and t-values of all relationships hypothesized in the model are shown in Figure 2. The non-significant relationship (path) is shown by a dashed line in this figure. H1 posited that effective PRM of an ERP implementation project would have a significant impact on its success. The results of SEM analysis support this hypothesis (b ¼ 0.394, p , 0.001). H2 proposed that the composition and competence of the ERP project team would positively influence the success of ERP implementation. The coefficient for the path from TCC to SUC is positive and significant (b ¼ 0.401, p , 0.001), which supports H2. Finally, H3 suggested that reengineering the current business processes to align with ERP systems would positively influence the success of the ERP implementation. The coefficient for the path from BPR to SUC is not significant (b ¼ 0.075, p ¼ 0.381), which does not support H3.


4.4 Linear relationships Table IV shows the results of testing the influence of three independent variables on the ERP implementation success (SUC) as dependent variable in Iranian organizations. Project Management

H1* (β = 0.394, t = 6.010)

Team Composition and Competence

H2* (β = 0.401, t = 5.246)

ERP Implementation Success

Figure 2. Path analysis results for ERP implementation success model

*p < 0.001 Business Process Reengineering

H3 (β = 0.075, t = 0.876)

Standardised Unstandardised coefficients coefficients Model

B

Constant 1.820 PRM 0.002 TCC 0.003 BPR 2 0.002

95% confidence Collinearity interval for B statistics Lower Upper bound bound Tolerance VIF

SE

b

t-value

Sig.

0.132 0.001 0.001 0.001

0.186 0.164 20.131

13.762 2.450 2.263 2 1.754

0.000 1.559 0.015 0.000 0.025 0.000 0.081 2 0.005

Note: Dependent variable: SUC

2.080 0.004 0.004 0.000

0.768 0.839 0.790

1.303 1.192 1.265

Table IV. Linear regression model

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The results show that two of the independent variables, PRM (b ¼ 0.186, t ¼ 2.450, p ¼ 0.015) and TCC (b ¼ 0.164, t ¼ 2.263, p ¼ 0.025) contributed significantly to the model at the 0.05 level, while BPR (b ¼ 2 0.131, t ¼ 1.754, p ¼ 0.081) was not significant in the model. Table IV also shows that both PRM and TCC scores were positively related to SUC in Iranian firms. As PRM and TCC factors increase, ERP implementation projects are more likely to be successful. Looking at the standardised value of b coefficients of the PRM and TCC variables, it can be seen that they contribute to or have almost the same impact on the dependent variable in the model. The tolerance values, which are a measure of the correlation between the predictors, are high, meaning that there are no relationships between predictors. 5. Discussion The results of this study support the proposed hypothesis (H1) that there is a positive relationship between PRM and ERP implementation success. This result supports the findings of previous researches in developed countries (Bradley, 2008; Umble et al., 2003) and developing nations (Al-Mashari et al., 2006; Chien et al., 2007; Kamhawi, 2007; Nah et al., 2007; Sawah et al., 2008). ERP system implementation is a set of complex activities, involving all business functions and often takes more than one year to implement. Consequently, organizations should have an effective PRM strategy to control the implementation process, avoiding an overrun of the budget and ensuring that the implementation is on schedule. This can be done by establishing the ERP implementation project scope (which provides a detailed project plan with clear objectives, deliverables, realistic project milestones and end-dates) and developing a tracking and monitoring mechanism to monitor the actual progress. ERP implementing companies in Iran must have a strategy for effective PRM to oversee the process of implementing ERP to avoid overspending and ensure the implementation follows the timetable. Implementing an ERP system is a set of difficult actions which often requires about two years of constant effort and engages all business units. If ERP implementing companies do not comprehend the fundamentals of PRM, they will be at risk. In an ERP implementation project, there are some areas that need consideration, such as scope, integration plan, time, quality, cost, human resource, risk, communication, and procurement. The ERP implementation project will be successful if its PRM can organize and balance all of the factors properly. To achieve successful ERP implementation, Iranian firms should assign considerable time prior to starting implementation to prepare a project plan. A project plan is crucial because a company must develop a comprehensive plan early and predict the costs and time of the project. The ERP implementation plan provides a guide throughout the project and helps the project team to maintain the right focus on the objectives and aims of implementation. The ERP project plan is employed to steer the implementation of the project, to ensure easy communication between ERP project team members, and to respond to management comments pertaining to the achievement and schedule of the project. A best practice project plan would cover the project schedule and plans, risk management, and monitoring and feedback, as suggested by Al-Mudimigh et al. (2001). In summary, ERP adopting companies should clearly establish the ERP implementation project scope and control it throughout the project. The company should assess all requests for scope expansion of the ERP project carefully prior to approving them. Moreover, the company should provide and set up a detailed project

plan with clear objectives, deliverables, realistic project milestones and end-dates and enforce them with measurable results. The next important effort is to establish the project team and their responsibilities with a clear statement of work and define the performance objectives to coordinate and organize the project activities properly across all different parties involved. Furthermore, it is vital for ERP implementation to assess project progress on a periodic basis. A formal management process is also needed to track and monitor the vendor’s/consultant’s activities and communications. Lastly, the project manager/PRM team should be empowered to manage all aspects of the project, including balancing the business, technical, and change management requirements. The findings of this research also support the proposed hypothesis (H2) that there is a positive relationship between ERP TCC and ERP implementation success. The results of previous researches in developed nations (Bradley, 2008; Loh and Koh, 2004; Peslak, 2006) and developing countries (Al-Mashari et al., 2006; Chien et al., 2007; Ramayah et al., 2007) support the findings of the current study. An ERP implementation project demands the effort and cooperation of technical and business experts as well as end-users. It is necessary to form a skill-balanced project team having internal and external experts, managerial competencies, deep knowledge of the processes, and IT skills. Given the positive relationship between ERP TCC and ERP implementation success, a number of proposals may be presented to ensure successful implementation. The organization must assign an experienced and reputable project champion/manager to lead the implementation and establish a team consisting of all stakeholders, including users and technical personnel. The team should be working on the project on a full-time basis. An ERP implementation project involves all functional units within a company. This project requires the cooperation and effort of end-users, business professionals and technical experts. ERP adopting firms generally allocate some of their best workforce to the team implementing ERP. A cross-functional and balanced team must be selected and provided with clear definitions of responsibilities. The ERP project team should be composed of business and IT specialists from an external consultant or from within the adopting organization. Using a combination of the company’s employees and consultants to work jointly in the ERP project team will allow internal personnel to develop the technical expertise required for the implementation of the ERP system. ERP implementation teams must be multidisciplinary and dedicated teams, and normally include IT experts, operations staff and key users, and consultants with proficiency in managing change and restructuring business processes. It is crucial to form an ERP team which has a balance of skills ranging from management skills, internal and external professionals, IT competencies, to a thorough knowledge of procedures. The technical and business skills of the ERP project team will contribute to the successful implementation of the ERP system. The knowledge and expertise of the ERP project team are vital in providing know-how in the areas where the implementing company requires knowledge. Lastly, the key members of the ERP project must be empowered to make fast and valuable decisions. To summarise, ERP adopting companies should assign an experienced and reputable project champion/manager who is committed to the ERP project. Also, an ERP implementation team should be established by selecting members from a variety of balanced and cross-functional staff and external consultants. In addition, the ERP implementation team should be chosen from people with the best business


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(domain knowledge) and technical IS knowledge. Moreover, the team members should work full time on the ERP implementation project and the project should be their only priority. Furthermore, the ERP team should be authorized to make decisions relating to all aspects of the project, including technical and business issues. BPR was hypothesized (H3) to be positively correlated with ERP implementation success. However, the hypothesized relationship was not supported. This result is not consistent with the findings of prior research conducted in developed countries (Dowlatshahi, 2005; Peslak, 2006; Umble et al., 2003). One of the main reasons for this discrepancy may be that Iranian social practices and cultural values differ markedly from Western practices, as Moghadam and Assar (2008) argue. The Iranian organizations that were studied adopted BPR to align their processes with ERP requirements. However, they lack experience in BPR activities causing the system to fail, as Tarokh et al. (2008) describe. Ngai et al. (2008) point out that popular ERP packages developed by developed countries may not fit the requirements of organizations in developing countries because of the different business practices, and legal and government requirements. It is suggested that Iranian organizations that are thinking of implementing ERP should evaluate and select an ERP package carefully, as suggested by Ngai et al. (2008). Sawah et al. (2008) propose that organizations should have a detailed requirements specification before selecting ERP software and they should choose an appropriate vendor that is able to provide a flexible ERP system. From the perspective of the social shaping of technology theory (Williams and Edge, 1996), an ERP system is the result of social processes in a unique cultural background, the source of the system. Incorporated in any ERP software is a collection of assumptions, rules, values, and practices which reflect the requirements of the social context of the ERP vendor. Therefore, the selection of a particular ERP system implies acceptance of all the social aspects fixed in the software, which reveals a corporate culture about how work should be carried out. Several prior studies have emphasized that the popular ERP software designed by developed countries cannot meet the requirements of enterprises in developing countries (Ngai et al., 2008). When companies in a social context implement ERP software developed in a different social context, they will face misfit problems. Several ERP implementing companies in Asia have experienced similar problems of misfit (Liang et al., 2004). In addition, the ERP systems promoted by international vendors replicate practices of industries in the USA or Europe. Although western management practices and philosophies have shaped business practices of Asian companies, many of the practices are still unique. Western practices generally need formalized information and working processes. However, these processes are often incompatible with the exclusive practices of many Iranian firms. Western ERP systems cannot provide many requirements of Iranian companies such as the report formats required by the government, Persian user interfaces, and so on. Iranian social practices and cultural values differ noticeably from Western practices (Moghadam and Assar, 2008). Iranians have specific ways of doing business and there is a misalignment between current business processes and ERP processes. Organizational fit of the ERP system is essential to the success of the ERP system. Organizational fit of the ERP system is defined as “congruence between the original artifact of ERP and its organizational context” (Sawah et al., 2008). To ensure a close match between the ERP adopting organization and the ERP system, companies should

choose ERP software that corresponds closely to their business process. Given that it is almost impossible to obtain a complete match between business requirements and an ERP system, the implementing company can either modify the ERP system (software adaptation) to adapt to its processes or modify its processes to adapt to the ERP system (organizational adaptation). ERP adopting companies in Iran started reengineering business processes to align them with ERP requirements. However, they came across two main limitations when conducting BPR. First, Iranian companies have no background and experience in process management orientation and BPR activities. Moreover, the lack of experience of the BPR consulting companies created serious obstacles for process reengineering in Iranian organizations. Second, there were many Iranian government rules and regulations which could not be modified or removed. Many BPR projects in Iran have failed to produce acceptable results due to legal and management obstacles (Tarokh et al., 2008). Consequently, Iranian ERP adopters shifted to customize the ERP systems, even though it took more time and cost more. ERP system customization is an effort to overturn the vendor’s preferences, resulting in new software that represents a different viewpoint about how work should be performed in the user environment. Based on the study’s findings and the above discussion, several suggestions are made for ERP adopting companies and ERP vendors. First, because of government standards and specific business conditions, companies have to conform to the business practices of their respective country. So, ERP systems may not be able to meet some of the unique requirements of the adopting companies such as different practices, data, and outputs. Any successful ERP project needs a match between the organizational processes and the ERP system. Therefore, the ERP implementing company should assess and select ERP software carefully. The selection of a suitable ERP system is an important step but both a time-consuming and challenging process. Companies intending to select ERP software must have a detailed requirements plan. A thorough assessment of the ERP system features is necessary before selecting the ERP vendor. The main criterion for choosing ERP software is that fits well with local requirements. The ERP system should be compatible with existing business processes to minimize the need for BPR. Another important principle when selecting ERP software is flexibility. The adopting company should select a suitable ERP vendor that is able to offer an ERP system with maximum flexibility. In addition, it is also vital for the adopting organization to select those ERP systems that are easy to customize. In such cases, the time and money spent on modification can be minimized. Second, Iranian and Western cultural perspectives on changes related to BPR are very different. Unlike Western culture, Iranian culture is more reactive, past oriented, and unwilling to make organizational changes (Moghadam and Assar, 2008). Iranian executives and staff are not prepared for such an enormous transformation. BPR practices can damage Iranian firms, rather than raising the level of management of these companies and their effectiveness. Convincing Iranian companies to abandon the processes they have put in place and implement a set of new unfamiliar procedures is a great challenge. Therefore, any organizational change should be achieved step by step, by using a milder change strategy such as business process improvement. BPR is a revolutionary method that calls for radical rethinking and the renovation of the current business processes. In contrast with this, business process improvement involves evolutionary and milder changes, and consequently, it would have a less drastic impact


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on the current processes of the organization (Davenport and Stoddard, 1994). As a result, following business process improvement approaches is a more suitable approach in the context of Iranian companies. Third, various governmental regulations and the legal context of countries oblige companies to have country-specific requirements. So, ERP vendors should prepare themselves to deal with problems of the environment in which their ERP software is implemented. International ERP vendors should localize their ERP systems to reflect the characteristics of local management. Localization of ERP software means that development of the system fits the requirements of the user’s context. The requirements usually depend on country, language, and cultural codes. The business processes in Iranian companies have developed in a specific regulatory and cultural context (Moghadam and Assar, 2008) and they are different from business models embedded in international ERP systems. As a result, international ERP vendors which intend to penetrate Iran’s ERP market should incorporate Iranian culture into their ERP software. International ERP vendors are advised to hire Iranian software engineers and business analysts to improve their ERP products. 6. Conclusion A review of the literature pertaining to factors influencing ERP implementation illustrated that there is a lack of research conducted in developing countries. This was also mentioned by Ngai et al. (2008). This study undertook the task of examining ERP implementation in a developing country, namely Iran. It developed and empirically tested a model for ERP implementation success from the ERP project environment perspective. The proposed model analyzed the relationships between three independent variables – PRM, ERP TCC, and BPR – with ERP implementation success as the dependent variable. The model was tested and validated with empirical data from Iranian organizations. It was found that only one variable, namely BPR, does not have a positive relationship with implementation success. As mentioned earlier this finding contradicts the findings of prior research conducted in developed countries such as Australia (Grabski and Leech, 2007), Canada (Peslak, 2006), and the USA (Mabert et al., 2003; Peslak, 2006; Stratman and Roth, 2002; Umble et al., 2003). This study contributes to academic research by producing empirical evidence to support the theories of CSFs and ERP implementation success. The research confirms that PRM, and ERP TCC are positively related with successful ERP implementation. These findings are also important if the context of this research is taken into consideration. No prior research has studied ERP implementation projects in Iran. Therefore, this research adds to the growing body of knowledge on ERP implementations in developing countries. In addition, this study develops a research model that can be applied in other Asian, Muslim and developing countries to test its applicability, and to examine cross-cultural issues of ERP implementation success. Lastly, from a comprehensive review of the literature, Finney and Corbett (2007) identify a major gap in the literature, which is the lack of research into ERP CSFs and ERP implementation success from the perspective of key stakeholders. This study is one of very few that examine the success of ERP implementation from the perspective of key stakeholders (operational/unit/functional managers). This research has significant managerial implications. First, Iranian organizations and managers could gain an understanding of the complexities inherent in ERP

installations to avoid barriers and increase the likelihood of achieving the desired results. Second, the outcomes of this study are also useful to ERP vendors and consultants in preparing some strategies to overcome the misfit between their ERP products and ERP adopting organizations in developing countries. Although the findings of the current study contribute to a better understanding of the successful implementation of ERP systems, there are several limitations to this study. The first limitation of this study is its generalizability. This study presents the viewpoints of corporations operating in Iran, which is located in the Middle East. It is difficult to say whether the findings can be generalized to other regions of the world. Furthermore, ERP implementation success dimensions were measured using subjective and perceptual measures. This was due to the difficulty in securing the related factual data from the participating organizations. However, the use of subjective measures is common practice in the literature, and this measurement approach was deemed appropriate here (Chien et al., 2007; Nah et al., 2007). Since few empirical studies have examined ERP implementation success in developing countries, there are numerous paths for future research and extensions of this study. More studies could be conducted in developing countries in the Middle East, North Africa and other Muslim countries. Moreover, this study focuses on the factors related to the ERP project environment for successful ERP implementation. Future research could examine other factors relating to the organization of the ERP system itself. References Al-Mashari, M., Al-Mudimigh, A. and Zairi, M. (2003), “Enterprise resource planning: a taxonomy of critical factors”, European Journal of Operational Research, Vol. 146, pp. 352-64. Al-Mashari, M., Ghani, S.K. and Al-Rashid, W. (2006), “A study of the critical success factors of ERP implementation in developing countries”, International Journal of Internet and Enterprise Management, Vol. 4 No. 1, pp. 68-95. Al-Mudimigh, A., Zairi, M. and Al-Mashari, M. (2001), “ERP software implementation: an integrative framework”, European Journal of Information Systems, Vol. 10, pp. 216-26. Bernroider, E.W.N. (2008), “IT governance for enterprise resource planning supported by the DeLone-McLean model of information systems success”, Information & Management, Vol. 45 No. 5, pp. 257-69. Botta-Genoulaz, V. and Millet, P.A. (2005), “A classification for better use of ERP systems”, Computers in Industry, Vol. 56, pp. 573-87. Bradford, M. and Florin, J. (2003), “Examining the role of innovation diffusion factors on the implementation success of enterprise resource planning systems”, International Journal of Accounting Information Systems, Vol. 4, pp. 205-25. Bradley, J. (2008), “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. Calisir, F. and Calisir, F. (2004), “The relation of interface usability characteristics, perceived usefulness, and perceived ease of use to end-user satisfaction with enterprise resource planning (ERP) systems”, Computers in Human Behavior, Vol. 20, pp. 505-15. Chien, S.W. and Tsaur, S.M. (2007), “Investigating the success of ERP systems: case studies in three Taiwanese high-tech industries”, Computers in Industry, Vol. 58, pp. 783-93.


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Appendix

Variable/item Project management The project scope was clearly established and controlled A detailed project plan (i.e. the activities to cover at each stage) was provided and established Realistic project milestones and end dates were defined and set with measurable results The responsibility for all parts of the implementation project was defined and assigned The project activities across all affected parties were coordinated and organized properly There was a formal management process to track and monitor the vendor activities The project progress was reviewed and assessed on a periodic basis Team competence and composition The project had an experienced and reputable project champion/manager who was committed to the ERP project A variety of balanced or cross-functional team members were selected for the ERP implementation The people selected for ERP implementation teams had the best business (domain knowledge) and technical knowledge The implementation team was empowered to make decisions relating to the project Those selected for the ERP implementation were working on the project full time as their only priority Sufficient incentives or compensation were given to those selected for the ERP project Business process reengineering Our firm relied heavily on reengineering its business processes to fit ERP systems with minimal ERP customization

Sources Muscatello and Chen (2008), Sedera and Dey (2006), Nah and Delgado (2006) Muscatello and Chen (2008), Nah et al. (2007), Kamhawi (2007), Ehie and Madsen (2005) Nah et al. (2007), Sedera and Dey (2006), Nah and Delgado (2006), Ehie and Madsen (2005) Muscatello and Chen (2008), Nah et al. (2007), Sedera and Dey (2006), Nah and Delgado (2006) Nah and Delgado (2006), Sedera and Dey (2006), Nah et al. (2003) Muscatello and Chen (2008), Nah et al. (2003), Stratman and Roth (2002) Muscatello and Chen (2008), Nah et al. (2003), Zhang et al. (2003), Stratman and Roth (2002)


Bradley (2008), Sedera and Dey (2006), Nah and Delgado (2006), Zhang et al. (2003), Stratman and Roth (2002) Nah et al. (2003, 2007), Nah and Delgado (2006), Ehie and Madsen (2005), Kim et al. (2005) Nah et al. (2003, 2007), Wu and Wang (2007), Sedera and Dey (2006), Ehie and Madsen (2005) Sedera and Dey (2006), Nah and Delgado (2006), Nah et al. (2003) Bradley (2008), Nah et al. (003, 2007), Sedera and Dey (2006), Nah and Delgado (2006) Bradley (2008), Nah et al. (2007), Nah and Delgado (2006), Sedera and Dey (2006)

Muscatello and Chen (2008), Kamhawi (2007), Sedera and Dey (2006), Ehie and Madsen (2005), Nah et al. (2003), Bradford and Florin (2003), Zhang et al. (2003) Our firm initially mapped out (identified and Muscatello and Chen (2008), Ehie and Madsen documented) existing business processes (2005), Huang et al. (2004) Our firm standardized the business processes to Muscatello and Chen (2008), Law and Ngai (2007), align with the ERP as far as possible Ehie and Madsen (2005), Hong and Kim (2002) Our firm analyzed and integrated redundant and Muscatello and Chen (2008), Hong and Kim (2002) inconsistent organizational processes to align with the ERP Our firm developed new organizational processes Kim et al. (2005), Hong and Kim (2002) to align with the ERP Our firm tried to customize the ERP systems to Kamhawi (2007), Sedera and Dey (2006), Huang our business processes with a minimal amount of et al. (2004), Nah et al. (2003) BPR (reverse coded)

Table AI. Items used to measure the ERP project environment and source of references

Table AII. Items used for measuring ERP implementation success and source of references Ifinedo (2008), Nah et al. (2007), Stratman and Roth (2002)

Kamhawi (2008), Jones et al. (2008), Bernroider (2008) and Ifinedo (2008)

Kamhawi (2008), Bernroider (2008), Gable et al. (2008), Ifinedo (2008), Law and Ngai (2007), Sedera et al. (2007) Kamhawi (2008), Jones et al. (2008), Bernroider (2008), Ifinedo (2008), Law and Ngai (2007), Zhang et al. (2005) Jones et al. (2008), Ifinedo (2008), Kamhawi (2007), Sedera et al. (2007), Zhang et al. (2005) Implementing the ERP system has helped to improve managerial efficiency Jones et al. (2008), Ifinedo (2008), Huang et al. (2004) and effectiveness Implementing the ERP system has helped to improve the firm’s overall Jones et al. (2008), Kamhawi (2008), Gable et al. (2008), Ifinedo (2008), Sedera productivity et al. (2007) Implementing the ERP system has helped to improve the firm’s overall Jones et al. (2008), Bernroider (2008), Gattiker and Goodhue (2005) business performance/profitability

Organizational impact Implementing the ERP system has promoted better use of the organizational data resource and enhances higher quality of decision making Implementing the ERP system has helped to improve organizational-wide communication and sharing of information across the enterprise Implementing the ERP system has helped to improve and rationalize business processes and to eliminate redundant tasks Implementing the ERP system has helped to increase (internal or external) service/satisfaction Implementing the ERP system has helped to reduce organizational cost

The ERP system is beneficial for the tasks of individuals and improves employee work efficiency Overall, there is satisfaction with the ERP system

Gable et al. (2008), Law and Ngai (2007), Somers et al. (2003) Gable et al. (2008), Law and Ngai (2007), Somers et al. (2003) Gable et al. (2008), Sedera et al. (2007), Somers et al. (2003) Jones et al. (2008), Law and Ngai (2007), Wu and Wang (2007), Chien and Tsaur (2007), Somers et al. (2003) Jones et al. (2008), Gable et al. (2008), Law and Ngai (2007), Wu and Wang (2007), Chien and Tsaur (2007), Somers et al. (2003) Jones et al. (2008), Gable et al. (2008), Ifinedo (2008), Nah et al. (2007), Gattiker and Goodhue (2005), Calisir and Calisir (2004) Peslak (2006), Calisir and Calisir (2004), Bradford and Florin (2003), Gable et al. (2008)

Sources

938

User satisfaction The ERP provides output and reports that I need The ERP provides precise and clear information The ERP presents output and reports in a useful format The output information content provided by the ERP system is comprehensive The information provided by the ERP system is up to date

Factor/items

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About the authors Shahin Dezdar received his PhD from University of Malaya, Malaysia, MS degree in industrial management and his BS in Industrial Engineering from Amir-Kabir University of Technology (Tehran Polytechnic) in Iran. He has been managing several large projects in enterprise systems implementation and management consultancy in Iran. His research interests include ERP systems implementation, IT/IS planning and management, and strategic management. His research has been published in Industrial Management & Data Systems and several international conferences proceedings. Sulaiman Ainin obtained her PhD from the University of Birmingham and her MBA from University of Stirling. She currently teaches management information system related courses at the Faculty of Business and Accountancy, University of Malaya. Her research interests include technology adoption and acceptance, technology diffusion and digital divide and e-commerce applications. Sulaiman Ainin is the corresponding author and can be contacted at: ainins@um. edu.my

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