Critical Success Factors of ERP Implementations

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Transcript of Critical Success Factors of ERP Implementations

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Critical Success Factors of ERP Implementations in Belgian SMEs:A Multiple Case StudyClaude Doom and Koen Milis HOGESCHOOL-UNIVERSITEIT BRUSSEL

ERP successCritical Success Factors (CSF)Most research: large implementations

Focus on smaller ERP implementations in SMEsFocus on Belgian marketMany SMEsCase study of 4 successful implementations

Preliminary results

Critical Success Factors for ERPCSF: improves chances of successful project implementation

Five groups:Vision, scope, and goalsCulture, communication, and supportInfrastructureApproachProject management

Vision, Scope, and GoalsEnterprise vision, ERP project scope, Implementation goals

Vision, Strategy and Business planClear and motivating business visionClear project mission (related to business)Clear definition of strategic goalsClear business plan, describing benefitsModel of target businessScopeClear definition of ERP project scopeLimitation of scope to essential business functions

Culture, Communication, and SupportSenior management supportProject approvalIdentifying project as top prioritySenior management participationDefending and supporting projectMediation in conflictsUnderstanding of technology and issuesProper resource assignmentCommunication of shared visionCommunication of role of new system to staffIdentify and approve new organizational structures, roles and responsibilitiesApprove codes of conduct

Culture, Communication, and SupportUser involvementEffective change managementStrong corporate identityOpen to changeEncouraging open communicationDetermination to accept new technologiesDetermination to overcome implementation problemsProject championInternal communicationAnnouncement of project scope, objectives before onsetFormal presentations / user participation (requirements, results)Supplier management

InfrastructureStandardized IT infrastructureSuitable business and IT legacy systems

ApproachOverall approach to project

Formalized project approach and methodologySkeleton approach: limited start expansionSingle module: module per moduleBig Bang: complete systemFocus on user requirementsUse of external consultantsUser trainingData accuracy (at conversion, at input)Alignment with business processes

Project ManagementProper project planning, phasing and follow-upProject goals description (realistic quality, time and cost goals)Project scopeIdentification business processesChoice of modulesIdentification of changesProject phasing and critical path analysisMilestones and deadlinesResources planProject follow-up organizationContingency measures

Project ManagementProperly organized project managementAppropriate project teamsA single physical locationIncentives for delivery within time and budgetIncentives and risk-sharing agreements with partners

Critical Success Factors in Belgian SMEsDo these CSFs apply to Belgian SMEs?

76 SMEs with known successful ERP implementations#employees: 10 250Revenue < 50 mio euroBalance total < 43 mio euro

Limited survey4 Representative casesDifferent sectorsStructured interview of key players (IT, Management)

CompanyActivityEmployeesRevenue in 2006 (mio euro)F-CoLatex-foam 11334.1M-CoProcess engineering 5714.5O-CoVegetable oils 8784.0W-CoTires and Wheels 5140.5

F-CoLeading European manufacturer of latex foamSites in Belgium, Czech republicSales offices in 10 more countries

SAP implementationPurchasing, order entry, materials management, production planning, financial accounting, distribution and logistics, asset management, data warehouseSingle siteProject divided into subprojects10% modifiedBig Bang roll-out

F-Co: Project

Duration: 6 months planned, 7-12 months effectiveCost: 1 1.5 mio euro as plannedUseful lifetime: 10 years

ComponentFraction of costHardware10%Software60%Consulting 5%Implementation team 5%Training20%

F-Co: CSFsUsers heavily involvedInformation and participationRequirements identificationTrainingNo formal acceptancePivotal role of senior managementProject approvalFinancial responsibilityTop priorityChange managementOrganization open to changeCommitment to new technologyDetermination to overcome operational problems

F-Co: CSFsChange managementProject championMiddle managementDefending projectProject approach and managementMixed team with external consultantsProject manager selection criteria: competences and experienceTeam membersTop performing staffMostly part-time involvementCritical decisions: company management (close collaboration)Incentive for delivery within time and budget

Project participantsFraction of staffUsers50%Business analysts15%Technical experts10%External consultants25%

M-CoBranch of world-wide provider of products and technologies for separation, heat transfer, fluid handling

Intentia ERP suitePurchasing, order entry, materials management, financial accounting, distribution and logistics, financial managementInterface to data warehouse and reporting toolsDivision into subprojects20% modifications

M-Co: Project

Duration: 7-12 months, slightly longer than plannedCost: 1 1.5 mio euro as plannedUseful lifetime: 10 years

ComponentFraction of costHardware30%Software35%Consulting10%Implementation team10%Training15%

M-Co: CSFsUser involvement (outside project team!)InformedNot actively involvedOnly management participated activelyRequirements, advice and feedbackPositive acceptance of final resultExtensive trainingCrucial role of Management participationApprovalResponsibilityIdentification as top priority

M-Co: CSFsChange managementCorporate culture: flexibility, shared values, common goalsOpen communicationProject championMiddle managementEffective contribution unclearProject approach and managementProject manager selection criteria: capabilities, flexibility, reputationTeam membersMostly part-timeConsultation with management for critical decisionsNo incentives

Project participantsFraction of staffUsers40%Business analysts20%Technical experts20%External consultants20%

O-CoEuropean division of global player in development and production of vegetable oils

SAP implementationPurchasing, order entry, materials management, production planning, financial accounting, distribution and logistics, financial management, data warehouse, advanced planning30% modifications

O-Co: Project

Duration: 7-12 months as plannedCost: 1 1.5 mio euro as plannedUseful lifetime: 5 years?

ComponentFraction of costHardware10%Software10%Consulting50%Implementation team20%Training10%

O-Co: CSFsParticular attention to user involvementTimely informationRequirements, remarks, feedbackActively seek user approvalActive involvement top managementApprovalIdentification as top priorityConflict resolutionActive participationNot final responsibility (final responsibility carried by member of operational management)

O-Co: CSFsChange managementCorporate culture of open communicationOpenness to changeCommitment to new technologyStrong will to overcome operational problemsChange agents and Project champion (middle management)Emphasizing advantagesDefense against criticsConflict resolutionContacts with usersDetecting problems with system

O-Co: CSFsProject managementProject teamBest staff members50% end usersProject manager selection criteria: capabilities, experience, reputation, flexibilityAll critical decisions taken by corporate managementNo incentives

Project participantsFraction of staffUsers50%Business analysts10%Technical experts 0%External consultants40%

W-CoProvider of industrial and agricultural tires and complete wheelsBelgium: 3 sites

Intentia ERPPurchasing, order entry, materials management, production planning, financial accounting, distribution and logistics, financial managementInterface with data warehouse5% modificationsLoose planningSplit into subprojects

W-Co: Project

Duration: 7-12 months as plannedCost: 1 1.5 mio euro as planned

ComponentFraction of costHardware 5%Software15%Consulting50%Implementation team10%Training20%

W-Co: CSFsMajor user participationInformation whole communityRepresentation by a few usersSoliciting user inputRequirements, feedbackNo formal approvalTraining: job helpersTop management instrumentalApprovalAlignment with corporate strategyIdentification as top priorityConflict mediationNecessary changes in corporate cultureAssumed final responsibility

W-Co: CSFsChange managementProject championProject managementProject teamBest staff membersMostly part-timeProject manager selection criteria: reputation, flexibilityUrgent decisions taken by project teamProper communication with top management

Project participantsFraction of staffUsers10%Business analysts50%Technical experts20%External consultants20%

Critical Success Factors in Belgian SMEsVision, Scope, and GoalsVision, strategic goals, and business planScopeEfficient management reportingCulture, Communication, and SupportSenior management supportUser involvementEffective change managementInternal communicationSupplier management44?44444

Critical Success Factors in Belgian SMEsInfrastructureA standardized IT infrastructureSuitable business and legacy systemsApproachA formalized project approach and methodologyFocus on user requirementsUse of external consultantsUser trainingData accuracyAlignment with business processes84?444?

Critical Success Factors in Belgian SMEsProject ManagementProper project planningProper project managementGood project teams444

ConclusionsImportant Critical Success Factors of ERP implementations in Belgian SMEs:A clear vision on the strategic goals of the implementationSenior management supportActive user involvementA