CRITICAL SUCCESS FACTORS IN ERP PROJECTS
Case studies in two industrial organizations in the Netherlands
Jos J.M. Trienekens
Eindhoven University of Technology, Den Dolech 2, Eindhoven, The Netherlands,
Wouter Kuijpers
ACA International, Hurksestraat 31, Eindhoven The Netherlands
Ruud Hendriks
Oce, Solinger strasse 5-7, Mülheim a/d Ruhr, Germany
Key words: ERP system implementation, success factors, case studies
Abstract: Over the past decade many organizations are increasingly
concerned with the implementation of Enterprise
Resource Planning (ERP) systems. Implementation can be considered to be a process of organizational
change influenced by different factors of type organizational, technological and human. This paper reports
on critical success factors (CSFs) in two actual ERP implementation projects in industry. Critical success
factors are being recognized and used in these projects and serve as a reference base for monitoring and
controling the implementation projects. The paper identifies both (dis)advantages of CSFs and shortcomings
of ERP implementation project management.
1 INTRODUCTION
Over the past decade a new class of software
applications has emerged: ERP systems. These
software packages seek to integrate the complete
range of a business’s processes and data
communication patterns on the basis of one single
information and IT architecture (Klaus et al, 2000).
Quality control and assurance during the
im
plementation of ERP packaged software has been
under-researched, in particular regarding the
identification, definition and validation of critical
success factors (Krumbholz et al, 2001), (Marble,
2003). These factors can be of different types, such
as organizational (e.g. top management support),
human (e.g. communication attitude, user
resistance), technical (e.g. business process
modeling methods and tools), (Stelzer et al, 1998),
(Trienekens et al, 2001). Although some articles
look at factors that drive success in ERP
implementation, they look at them from different
perspectives and also with different definitions of
“success factors” in mind (Aladwani, 2001),
(Amoako-Gyampa et al, 2003). Over the past years
several research papers have emerged that strive at
the identification and classification of CSFs (Hoon
Nah et al, 2001). More recently research papers have
emerged that focus on the evaluation and validation
of the CFSs relevance in practice, e.g. the CFSs
relevance along the different ERP implementation
project phases (Esteves et al, 2004). This paper takes
the latter research direction and reports on two ERP
implementation case studies in that CSFs are being
recognized and used.
In section 2 a set of 11 success factors for ERP
im
plementation is introduced. This set of success
factors is presented in (Hoon Nah et al, 2001) and
has been derived from 10 relevant articles, on the
basis of a well-structured computer search of
databases of published works and conference
proceedings in the information systems area. Each of
the 11 success factors is described in terms of sub-
CSFs and their aspects. In section 3 the results of the
discussion sessions with the project management of
the two distinct ERP projects are presented and
discussed. Section 4 finalises the paper with
conclusions and recommendations, and points to
further work to be done.
84
J.M. Trienekens J., Kuijpers W. and Hendriks R. (2005).
CRITICAL SUCCESS FACTORS IN ERP PROJECTS Case studies in two industrial organizations in the Netherlands.
In Proceedings of the Seventh International Conference on Enterprise Information Systems, pages 84-91
DOI: 10.5220/0002546400840091
Copyright
c
SciTePress
2 RESEARCH FRAMEWORK AND
APPROACH
A total of 11 critical success factors for ERP
implementation have been identified, based on a
review of the ERP literature (Hoon Nah et al, 2001).
These 11 factors were obtained after careful analysis
and grouping of related sub-factors. To classify the
CSFs identified a process theory approach was used
that focuses on the sequence of events leading up to
implementation completion (Markus et al, 2000).
This sequence consists of our phases in an ERP life
cycle, respectively chartering (decisions defining the
business case), project (getting system and end users
up and running), shakedown (stabilizing, eliminating
‘bugs’, getting to normal operations), onward and
upward (maintaining systems, supporting users,
getting results, upgrading, system extensions). These
phases are in line with the stages of the traditional
systems development life cycle. The eleven CSFs
are respectively:
1. ERP teamwork and composition
2. Top management support
3. Business plan and vision
4. Effective communication
5. Project management
6. Project champion
7. Appropriate business and legacy systems
8. Change management program and culture
9. Business process reengineering (BPR) and
minimum customization
10. Software development, testing and
troubleshooting
11. Monitoring and evaluation of performance
In section 3 each of the CSFs will be highlighted on
the basis of their so-called key aspects, as identified
in literature (Hoon Nah, 2001). Consequently the
way they are recognized in two case studies in
practice wil be reported as well as their
shortcomings and advantages.
The approach that has been followed in our research
consists of four main steps (Hendriks et al, 2004):
Selecting two appropriate ERP
implementation projects in industrial
domains.
Collecting relevant project documentation
on these selected projects (in particular the
project plans).
Discussing and analysing the relevant
project documentation and the project
experiences with the ERP project
management, on the basis of structured
questionnaires that are derived from the
unified CSF models from literature.
Summarizing lessons learned from
practitioners regarding the usage of success
factors in ERP implementation projects.
The two main research questions that formed a basis
for a structured questionnaire, to be used in the
discussion sessions with ERP implementation
project managers, are respectively:
1. Can CSFs be recognized in ERP
implementation projects in practice? What
are shortcomings and what are
opportunities?
2. Can CSFs really be used as management
instrument to support project managers
with monitoring and controlling the ERP
project? What are shortcomings and what
are opportunities?
A structured questionnaire starting from these
two research questions and making use of the
literature on the identification and classification of
CSFs has been applied in structured in-depth
discussion sessions with the project management of
the two selected ERP implementation projects.
3 DISCUSSING CSF: CASE STUDY
RESULTS
In this section the results of the two case studies on
ERP implementation are presented. In the following
we will first introduce in section 3.1 briefly the two
case study environments. Subsequently we will
present in section 3.2 the results of the discussion
sessions regarding each of the CSFs.
3.1 Case study characteristics
Case study 1: ERP implementation at OCE The
Netherlands
Océ is a global market leader in systems for the
production and management of technical
documentation packages. This includes hardware,
software and services that help customers move
from analogue to digital and subsequently to colour
and web-based document operations. The ERP
project will have a major impact on the sales and
service processes in the sales units of OCE.
Functional business areas that are currently involved
are respectively Finance & Accounting and Sales.
The project is currently in its ‘project’ phase (see
section 2). More than 250 employees will make use
of the ERP implementation. The project budget
exceeds E500.000,-. Main objectives are the
streamlining of the heterogenic sales and service
processes and the reduction of IT costs.
CRITICAL SUCCESS FACTORS IN ERP PROJECTS: Case studies in two industrial organizations in the netherlands
85
Case study 2: ERP implementation at Bosch VDT.
Van Doorne’s Transmissie (VDT) in The
Netherlands is part of the Robert Bosch GmbH
concern. VDT in Tilburg The Netherlands produces
the so-called ‘steel push’, an important component
of the Continuously Variable Transmission (CVT),
which is increasingly being used in a variety of CVT
applications in the automotive industry. Also in this
organization more then 250 employees will make
use of the ERP implementation.
At VDT an ERP package is currently being
implemented in the functional areas Finance &
Accounting, Warehouse, Technical support. Project
documents covering the implementation have been
evaluated on the basis of identified success factors
from literature. The project is partly in its ‘project
phase’ and partly in its ‘shakedown phase’ (see
section 2). The project budget exceeds E500.000,-.
Main objective of the project is a replacement of the
outdated and cost-ineffective current system.
3.2 Results of the discussion sessions
on CSFs
In this section the main results will be presented of
the discussion sessions on the CSFs with the project
managers (Hoon Nah et al, 2001).
CSF-1: ERP Teamwork and Composition
The CSF teamwork and composition is described
in terms of respectively:
Best people in the organization, which
is reflected by experience, educational
level and performance track record.
Cross-functional composition of the
team; team members should come form
distinct functional areas of the
organization so that implementation
problems can be discussed from
different angles.
The mix of consultants and internal staff
so that the internal staff can develop the
necessary technical skills for design and
implementation.
The priority of the ERP implementation
project for a project manager should
preferably be the top and only priority
and team members need to be assigned
fully to the implementation.
The team should be co-located together
at an assigned location to falicitate
collaboration.
Incentives should be given for
successfully implementing the system
on time and within the assigned budget.
Sharing of information within company
is vital.
Table 1: Results regarding ERP Teamwork and
Composition
CSF: ERP
teamwork and
composition
OCE VDT
best people in the
organization
team members
have both
process and
system
knowledge
team members
have both
system and
process
knowledge
cross-functional
team
coming from
different
functional areas
coming from
different
functional areas
mix of consultants
and internal staff
both external
consultants and
internal staff
both external
consultants and
internal staff
information sharing formally
organized
not formally
organized
top and only
prioirty of ERP
implementation
high priority,
full-time work
average
priority, no full-
time work
incentives for
succesful
implementation
no incentives
for team
members
no incentives
for team
members
location for
working together
more than one
dedicated
location for
team work
one dedicated
location for
team-work
Table 1 shows that both projects have similar
teamwork characteristics. The project leader at VDT
has besides his tasks as project manager also tasks as
a manager at the tactical level in one of the VDT
business functions. Surprisingly both organizations
don’t make use of incentives for their employees,
although this was stressed as a very important factor
in previous research (Hoon Nah et al, 2001).
CSF-2: Top Management Support
Sub-CSFs that are recognized in literature are
respectively:
Approval of project by top
management; publicly and explicitly
identifying the project as a top priority;
tying management bonuses to project
success.
The implementation project is aligned
with business goals.
Conflict handling; management has a
mediate function between the different
parties.
Allocation of valuable resources to the
project.
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Table 2: Results regarding Top Management Support
CSF: Top
management
support
OCE VDT
Project approval
by top
management
top management
personally
involved in
implementation
project (BU
managers are
member of the
steering group.
CEO is chairman
of the reference
board). No
management
bonuses.
no personally
involvement of
top
management. no
management
bonuses.
Alignment with
business goals
shared vision of
the organization
and the role of the
new system
no explicit
shared vision,
Conflict
handling
conflicts during
implementation
via formal
escalation
procedures
no explicit
formal conflict
handling
procedures
Allocation of
valuable
resources
big project team
with high
experienced team
members; enough
time
experienced
team members,
however: not
enough time
Quite opposite from the situation at OCE the
implementation project at VDT clearly lacks top
management support. All sub-CSFs scored negative
in the latter ERP implementation project.
CSF-3: Business Plan and Vision
Regarding this CSF the following sub-
characteristics are mentioned, respectively:
Steering the direction of the project on
the basis of a business plan.
Project mission related to business
goals.
Justification for investment based on an
explicitly defined business problem.
Usage of a clear business model of how
the organization should operate after
behind the implementation effort.
Table 3: Results regarding Business Plan and Vision
CSF: Business
plan and vision
OCE VDT
Steering the
direction of the
project
steering is
explicitly
specified,
controlled and
monitored
steering is
explicitly
specified but not
controlled and
monitored
Project mission
related to
business goals;
justification for
investment
clear link no link between
project and
business plan
Usage of a
clear business
model
specification of
how business
should operate
after
implementation
specification of
how business
should operate
after
implementation
The VDT project shows that it is not explictly
integrated in an overall business plan. There isn’t an
active control function at the higher management
level.
CSF-4: Effective Communication
Effective communication is, according to previous
research results, critical to ERP implementation.
Important aspects of communication are
respectively:
Management of expectations, management
of user input.
Content of cummunication, e.g. towards
user organizations: promotion of project
teams, project progress; towards team
members: importance, scope, objectives,
activities of the project.
Table 4: Results regarding Effective Communication
CSF: Effective
communication
OCE VDT
Management of
user input
none none
Content of
communication
one-way
publication of
project
progress;
intensive
communication
with team
members
informal
information on
project
progress;
informal
communication
with team
members
The table shows that both projects don’t match the
sub-CSFs regarding effective communication. VDT
is clearly more informally organized from this
perspective then OCE.
CRITICAL SUCCESS FACTORS IN ERP PROJECTS: Case studies in two industrial organizations in the netherlands
87
CSF-5: Project Management
Important aspects regarding Project Management
which are mentioned in (Amoako-Gyampah, 2003)
are respectively:
Clearly defined and limited scope, e.g.
amount of systems implemented,
involvement of business units, and needed
amount of business processes to be
reengineerde.
Formally defined milestones in order to
manage timely decisions and timeliness of
the project.
Coordinated training facilitated by an active
human resource department; application of
conflict escalation procedures.
Measuring success early, a focus on results
and constant tracking of schedules and
budgets against targets are important.
Table 5: Results regarding Project Management
CSF: Project
Management
OCE VDT
Clearly defined
and limited
scope
defined, but nor
formally and
measurable;
dynamic
management of
changes
defined, but
not formally;
no
management of
changes
Formally
defined
milestones
formally
specified
formally
specified
Conflict
escalation
procedures
formally
arranged
none
Early project
success
measurement
milestone
measurement of
progress and
budget
none
Project management is elaborated at OCE much
more then at VDT. Most of the sub-CSFs from
literature were recognized, excluding the subCSF
‘Coordinated training and active human resource
department’. Surprisingly both projects don’t have to
maintain clear links with this type of department.
CSF-6: Project Champion
Important sub-CSFs are respectively ‘High level
executive sponsorship’ and ‘Continuous conflict
management’. A business leader should be in
charge in orde to have a business perspective in the
project.
Table 6: Results regarding Project Champion
CSF: Project
Champion
OCE VDT
Project
champion
control by
executive
sponsorship
project
leader
formally
managed by
steering
group
no direct
influence of
higher
management on
project leader
Continuous
conflict
management
explicit task
of project
leader to
manage
conflicts
difficult position
of project leader
due to other
operational tasks
then ERP
implementation
The table shows that the sub-CSFs are recognized in
both organizations. At VDT the situation regarding
conflict handling is difficult because the project
manager represents different stake-holders: on the
one hand the ERP implementation in the overall
value chain of the business, and on the other hand
the operational management of a particular business
function.
CSF-7: Appropriate Business and Legacy
Systems
A stable and successful business setting is necessary
for successful ERP implementation. Business and IT
systems involving existing business processes,
organization structure, culture, and information
technology affect success. It determines the IT and
organizational change required for success (Hoon
Nah et al, 2001).
Table 7: Results regarding Appropriate Business and
Legacy Systems
CSF:
Appropriate
business and
legacy systems
OCE VDT
stable and
successful
business setting
intuitively yes;
however could
not be
determined in a
measurable
way
intuitively yes;
however could
not be
determined in a
measurable
way
In both organizations it appeared to be difficult to
discuss and determine in an objective, measurable
way whether the business setting is stable and
succesful enough for starting up an ERP
implementation project. Although intuitive opinions
of managemers point in the direction of a stable and
successful situation, too many subjective factors are
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playing a role for explicit and formal statement to
this CSF.
CSF-8 Change Management and Culture
The CSF Change Management and Culture covers a
wide range of cultural and business change aspects.
On the one hand subjective and qualitative subjects
are addressed, such as shared values and common
aims, corporate identity, strong willingness to accept
new technology (Wohlin et al, 2001). On the other
hand also quantitative tangible aspects are covered
such as the existence of a change management
program, team member training, user training and
the involvement of users in the implementation
project.
Table 8: Results regarding Change Management and
Culture
CSF: Change
Management and
Culture
OCE VDT
Change
management
program
yes no
User training formal
training
program for
user groups
formal
training
program for
user groups
Team member
training
formal
program
formal
program
User involvement
in project
none none
The table shows that only the more tangible CSF-
aspects could be addressed positively in the
discussion sessions in both the organizations.
However, it appeared to be impossible to get enough
clarity regarding the usage of the qualitative
intangible aspects of this CSF.
CSF-9: BPR and Minimal Customization
Previous research shows that business process
should be molded, in advance of the actual
implementation project, to fit the new system.
Aligning the business process to the software
implementation seems to be critical. The usage of
process modeling tools is strongly advocated.
Table 9: Results regarding BPR and Minimal
Customization
CSF: BPR
and minimal
customization
OCE VDT
Business
process
redesign and
customization
BPR before
ERP
implementation;
customization:
emphasis on
business
processes
BPR during
ERP
implementation;
customization:
emphasis on
ERP system
Usage of
business
process
modeling
tools
formal
modeling tools
(ASAP)
no tools used
The table shows clear differences between the two
organizations. OCE conforms completely to the
described CSF while VDT takes a rather opposite
standpoint.
CSF-10: Software Development, Testing and
Troubleshooting
Key aspects in this CSF are: establishment of an
overall ERP architecture before deployment to
prevent reconfiguration at every stage of
implementation. Troubleshooting errors is critical.
The organization implementing ERP should work
well with vendors and consultants to resolve
software problems and also for planwise data
migration. Proper tools and techniques, and skills to
use them, will aid in ERP success.
Table 10: Results regarding Software Development,
Testing and Troubleshooting
CSF: Software
development,
testing and
troubleshooting
OCE VDT
Software
methods,
architecture and
tools
explicit ERP
architecture as
basis for ERP-
architecture
explicit ERP
architecture
Software testing,
trouble shooting
advanced
methods and
tools, e.g.
SAP Solution
Manager
advanced
methods and
tools, e.g.
ABAB
workbench
Data migration formal plan
available
formal plan
available
CRITICAL SUCCESS FACTORS IN ERP PROJECTS: Case studies in two industrial organizations in the netherlands
89
Regarding this CSF it became clear that both
organizations covered completely and professionally
the specified sub-CSFs.
CSF-11: Monitoring and Evaluation of
Performance
Project management based criteria should be used to
measure against completion dates, costs and quality.
Operational criteria should be used to measure
against the production system.
Table 11: Results regarding Monitoring and Evaluation of
Performance
CSF:
Monitoring and
evaluation of
performance
OCE VDT
Measuring
project
performance,
e.g.
achievements
against project
goals
periodically
measured
periodically
measured
Measurement
of operational
criteria to
measure against
the production
system
measurement
of operational
criteria based
on explicit
Critical Project
Indicators
(CPIs)
no
measurement
of operational
criteria
At OCE measurement is elaborated on two levels,
respectively project performance and against the
production system. At VDT only the project level is
covered.
4 CONCLUSIONS
The presentation of the research results in the tables
in section 3 shows that CSFs can (partly) be
recognized and discussed with the project
management of ERP implementation projects. In
discussion sessions with the management of two
distinct ERP implementation projects, both
(dis)advantages of CSF-usage, as well as
shortcomings of project management, became clear.
Based on the results some recommendations have
been developed for on the one hand CSF elaboration
and improvement, and on the other hand ERP
implementation management improvement.
Hereafter we briefly summarise the main results.
1: CSFs being recognized and used.
Most CSFs could be addressed with the project
management of both the ERP implementation
projects and lead to fruitful discussions, in particular
CSFs such as CSF-5 Project Management, CSF-11
Monitoring and evaluation of Performance.
However, only one CSF is treated in a more or less
identical way in both projects, namely the
‘technology oriented’ CSF-10 Software
Development, Testing and Troubleshooting. Based
on the discussed sub-CSFs we concluded that both
organizations have professional software
development and testing departments that make use
of ‘state-of-the-art’ methods and tools.
CSFs that show big differences in the way they are
used in both projects are some of the so-called
‘organization orientedCSFs, respectively CSF-2
Top Management Support, CSF-3 Business Plan and
Vision, CSF-6 Project Champion and and CSF-9
BPR and Minimal Customization. The differences
between the two projects seem to be consistent: the
OCE project addresses each of the CSFs extensively
and formally, while the VDT project doesn’t. The
rationale for this could be that the ERP
implementation at VDT is considered to be the
responsibility of a particular project management
who has to do the job with a particular (and
dedicated) team. The VDT higher level management
has little confidence, and doesn’t want to spend extra
resources, in steering such a project from a higher
level (CSF-2, CSF-6), and/or in embedding the
project in an overall business plan and vision (CSF-
3, CSF-9).
Recommendation-1
The two projects are currently in their second
and third phase of ERP implementation (see
section 2). Still, no serious problems have
occurred, although rather big differences in
‘organization oriented’ CSF-usage could be
identified. In on-going case study research we
will continue to investigate these differences and
we will strive at the determination of the real
importance of particular ‘organization oriented’
CSFs for ERP implementation.
2: CSFs being recognized, but not used
Some sub-CSFs that seem to have a high importance
in literature are not at all addressed in the two ERP
implementation projects, respectively:
- the sub-CSF Incentives for both team
members and management (of CSF-1 ERP
Teamwork and Composition);
- the sub-CSF Management of user input (of
CSF-4 Effective communication);
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90
- the sub-CSF Coordinated training and
active human resource department (of CSF-
5 Project Management).
Regarding the first sub-CSF it appeared to be
common (European?) business policy in the two
organizations that no explicit connections are made
between successful work and incentives, such as
extra bonuses and/or other rewardings. Regarding
the second and the third sub-CSF mentioned above:
the project management of both projects considered
the way they (had) treated this CSF as a shortcoming
of their project management and defined some
improvement activities.
Recommendation-2
Differences regarding the way CSFs are used in
practice should be investigated on the level of
sub-CSFs. Sub-CSFs offer the opportunity to
define a particular CSF in a formal and
measurable way. Based on sub-CSF research
more precise explanations can be given for
particular shortcomings of an ERP project and/or
motives can be identified for not using a CSF as
defined in literature.
3: CSFs not being recognized and not being used.
CSF-7 and CSF-8, respectively Appropriate
Business and Legacy Systems and Change
Management and Culture are hardly being
recognized in each of the projects. The reason is that
they cover a too broad range of intangible and
subjective aspects, which makes it impossible to get
clear consensus on their precise meaning and their
impact on successful ERPimplementation. Therefore
they are not being used as management instrument
for controlling and monitoring an ERP
implementation project.
Recommendation-3
The discussion sessions with the project
management made clear that further elaboration of
particular CSFs is needed, e.g. regarding the
subjective and intangible elements in the defined
CSFs. In on-going case study research we will
investigate the possibilities of elaborating these
CSFs, e.g. in terms of practical guidelines for their
usage as an instrument for monitoring and
controlling ERP implementation projects.
Case study research on CSFs for ERP
implementation shows that CSFs, as identified in
literature, are not only abstract concepts and terms
but that they can be applied fruitfully in industrial
practice. The research results can be used both for
the improvement of the conceptual background of
the CSFs (e.g. the unified CSF models from
literature) and for the improvement of the actual
controlling and monitoring of ERP implementation
projects.
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