i

Critical Success Factors (CSF) of Enterprise

Resource Planning (ERP) Implementations in Sri

Lankan Companies

Chamil B. Hathurusinghe

(139044216)

Subject Area: Management of Information Systems

Supervisor: Dr. Colin Price

Submitted: 14 November 2016

Word count: 16050

Dissertation submitted to the University of Leicester in partial fulfilment of the requirements of the degree of

Master of Business Administration

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TABLE OF CONTENTS

List of Tables ..................................................................................................................................................... iv

List of Figures ..................................................................................................................................................... v

Abstract .............................................................................................................................................................. vii

Chapter 1 – Introduction ..................................................................................................................................... 1

1.1 Research background ................................................................................................................................ 1

1.2 Scope of the Study .................................................................................................................................... 1

1.2.1. Empirical Scope ................................................................................................................................ 1

1.2.2 Theoretical Scope ............................................................................................................................... 1

1.3 Key Objectives .......................................................................................................................................... 2

1.4 Significance of the study ........................................................................................................................... 2

Chapter 2 - Literature Review ............................................................................................................................ 4

2.1 Introduction ............................................................................................................................................... 4

2.2 What is ERP .............................................................................................................................................. 4

2.3 Why do we need ERP? .............................................................................................................................. 6

2.4 Constraints and drawbacks of Implementing ERP ................................................................................... 8

2.5 ERP in Sri Lanka ..................................................................................................................................... 10

2.6 ERP Implementation process .................................................................................................................. 12

2.6.1 Implementation success definition and measurement ...................................................................... 12

2.7 Critical Success factors framework ......................................................................................................... 15

2.8.1 Cultural Factors ................................................................................................................................ 17

2.8.2 Strategic Factors ............................................................................................................................... 20

2.8.3 Tactical Factors ................................................................................................................................ 22

2.9 Conclusion .............................................................................................................................................. 24

Chapter 3 – Methodology ................................................................................................................................. 26

3.1 Introduction ............................................................................................................................................. 26

3.2 Research Definition ................................................................................................................................. 26

3.1.1 Variables ........................................................................................................................................... 27

3.1.2 Research Objectives Validation Criteria .......................................................................................... 27

3.2 Research Philosophy ............................................................................................................................... 28

3.3 Research Approach ................................................................................................................................. 28

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3.4 Research Strategy .................................................................................................................................... 28

3.5 Data ......................................................................................................................................................... 29

3.5.1 Population and Sample ..................................................................................................................... 29

3.5.2 Questionnaire .................................................................................................................................... 30

3.5.3 Data Collection ................................................................................................................................. 30

3.5.4. Strengths and Limitations ................................................................................................................ 31

3.5.5 Data Analysis ................................................................................................................................... 32

3.6 Conclusion .............................................................................................................................................. 32

Chapter 4 – Data Analysis ................................................................................................................................ 33

4.1 Collection of data .................................................................................................................................... 33

4.2 Descriptive Statistics ............................................................................................................................... 33

4.3 Descriptive analysis of critical success factors in ERP implementations ............................................... 36

4.4 Correlation Analysis ............................................................................................................................... 40

4.4.1 Analysis of individual factors ........................................................................................................... 40

4.4.2 Analysis of grouped factors .............................................................................................................. 44

Chapter 5 – Discussion and Conclusions .......................................................................................................... 46

5.1 Findings and Discussion .................................................................................................................... 46

5.2 Theoretical Implications .................................................................................................................... 48

5.3 Practical Implications ......................................................................................................................... 48

5.4 Limitations ......................................................................................................................................... 48

5.4.1 Directions for future research ........................................................................................................... 49

5.5 Reflections .............................................................................................................................................. 49

References ......................................................................................................................................................... 51

Appendix ........................................................................................................................................................... 56

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LIST OF TABLES

Table 1 Summary of literature: Factors to discriminate success of ERP implementation ........... 16

Table 2 Summary of literature: Factors to discriminate success of ERP implementation ........... 17

Table 3 Composition of New to ERP respondents ....................................................................... 34

Table 4 ERP software Vs Respondents' level of involvement ..................................................... 34

Table 5 Ranking of CSFs using measures of central tendency .................................................... 37

Table 6 CSF rank based on frequency .......................................................................................... 37

Table 7 Summery of ranks - CSF ................................................................................................. 39

Table 8 Summary of ranks - grouped CSF ................................................................................... 39

Table 9 Correlations between the CSFs ........................................................................................ 41

Table 10 Regression Model summary: All CSFs ......................................................................... 43

Table 11 ANOVA : ALL CSFs .................................................................................................... 43

Table 12 Coefficients Table: All CSFs ......................................................................................... 43

Table 13 Correlation table: Grouped CSFs .................................................................................. 44

Table 14 Model Summary: Grouped CSFs .................................................................................. 45

Table 15 Regression model: Grouped CSFs ................................................................................. 45

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LIST OF FIGURES

Figure 1: Business Functions within ERP Systems (O'Brien 2004) ............................................... 6

Figure 2: Criterion for evaluating the effectiveness of the implementation ................................. 14

Figure 3 Conceptual frame work .................................................................................................. 26

Figure 4 Composition of Respondents based on Knowledge in ERP .......................................... 33

Figure 5 Ranks of CSFs based on software used .......................................................................... 38

Figure 6: Experience in ERP vs Ranks of CSFs ........................................................................... 38

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ACKNOWLEDGEMENTS

I would like to express my gratitude to my supervisor, Dr. Price for his guidance, advice and great kindness

shown to me throughout this research. This research would not have been possible without his pleasing

support.

I am extremely grateful and thankful to my superiors and colleagues in office for their guidance and support

given throughout my studies with University of Leicester and during the research phase. I owe my deepest

gratitude to my loving parents and my dearest sister for all the inspiration they have given me throughout my

life. Above all I am thankful to my parents for assisting me in accomplish my dreams of pursuing my higher

studies and giving me a better opportunity to have better future.

I would also like to thank all my lecturers and the management of BMS for the support and contribution of

their valuable knowledge to complete my MBA successfully. Last but not least I would like to thank all of

my friends for the support and encouragement given throughout my life. It’s a pleasure to thank who made

this possible.

Chamil Hathurusinghe

November 2016

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ABSTRACT

ERP is gaining popularity in South Asian countries even though the implementations are considered to be

complex and there are many cases where the implementations have failed. Therefore, further research and

evaluation of the CSFs of ERP implementations would be useful for the industry. This research analyses the

past academics on CSFs in ERP implementations and have identified 12 factors for further evaluation in Sri

Lankan business context. The sample for this study consists of 15 managers or executives involved in ERP

implementations in Sri Lanka.10 companies who had implemented full ERPs within last 10 years were

identified for the survey. Out of the 150 participants 84 complete responses were taken for the analysis and

deriving conclusions.

CSFs were ranked using descriptive statistics consisting mean, median, mode, sum and the frequency of each

rank. However, there were no major variation in ranking depending on the measure. Moreover, the 12 CSFs

identified were grouped into tactical, strategic and cultural factors and their impact on the success of

implementation were analyzed. Spearman correlation was calculated to identify the factors significantly

related to the successes and to identify inter-correlations between CSFs. In addition, a regression model was

fit to predict the success of implementation with the grouped CSFs.

It was revealed that most of the factors are interrelated and success is not merely driven by one or two factors

but each factor contributes directly or indirectly. Nevertheless, top management support was prominent as a

significant CSF. When grouped factors are considered, strategic factors were highlighted over cultural and

tactical factors. Tactical factors were identified as least significant for the success of implementation.

CHAPTER 1 – INTRODUCTION

1.1 Research background

In the turbulent business environment, the companies should adapt to changes fast in order to survive and

succeed. Business environment is influenced with diverse factors, hence involvement of technology is

essential for summarizing and presenting information on timely manner (Robert, 2011). ERP (Enterprise

Resource Planning) plays a vital role in providing accurate information on business operation. Even though

the concept of ERP is not the latest, it is currently getting popular in developing countries in South East Asia

(Scobbo, 2014). Today most of growing business organizations are adopting ERP to ensure the smooth

functioning of all activities and to facilitate its growth plan.

As the ERP involves integrating all business units of the organization, implementing a new ERP will not be

straight forward. Increasing trend in use of technology to facilitate the business strategies and complexity of

adopting the same, demands the knowledge in CSFs of ERP implementation (Leimeister & Huber, 2009). In

addition, published academic reports with reference to ERP implementations in Sri Lanka or South East Asia

are less compared to Western and Middle Eastern regions. Hence CSFs with the experiences in

implementations in Sri Lanka will be more useful for the current context (Dharmarathne, 2004). This

research will take the findings from published researches and explore the applicability to Sri Lanka.

1.2 Scope of the Study

1.2.1. Empirical Scope

The CSFs were identified by reviewing past academic published data and they were grouped as tactical,

cultural and strategic factors (table 2). The author has ranked CSF in Sri Lankan context by surveying the

opinion of different stakeholders in past ERP implementations.

1.2.2 Theoretical Scope

This research would review theories and models relating to ERP implementation, project management and

CSF frame work with the aim of finding conceptual relationship between the identified CSFs and success of

ERP implementation. Also this research will validate the correlation of each CSF with the success of

implementation statistically and derive the significance of each CSFs.

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1.3 Key Objectives

The aim of this research is to identify, validate and rank the CSFs for ERP implementations in Sri Lanka. The

research focuses on 10 ERP implementations and will collect the opinion from 15 stakeholders of each

implementation. The objectives of the study: -

1.3.1. To critically evaluate the relevant literature on ERP, how it evolved over time and CSF of ERP

implementations. The reasons for failure or success of the implemented system and contribution

of each factor to make it success or failure have to be concerned in here.

1.3.2. To identify common CSF in ERP implementation and ranking CSFs based on their significance in

making the implementation successful.

1.3.3. To identify the relationship between CSFs and the success of the implementation.

1.3.4. To categorize the CSFs as tactical, strategic and cultural factors and identify the significance of

each category in successful implementation.

1.3.5. To provide a statistical model to predict the success of the implementation based on the CSFs

based on the experience of ERP implementations in Sri Lanka in last 10 years.

1.3.6. Provide a list of key factors to focus in order to increase the probability of successful

implementation.

1.4 Significance of the study

The concept of ERP is currently becoming popular amongst Sri Lankan companies. The complexity and non-

familiarity of ERPs have delayed Sri Lankan companies adopting ERPs but currently ERP is getting popular

as a tool to facilitate growth and reduce cost (Gunawardena & Wickramasinghe, 2010). This research will

encapsulate findings from other literature and also presents the survey results from local implementation

experiences. Hence this study will be useful for all organizations who is pursuing to embark on ERP

implementations as a guideline to set the background to ensure success.

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In addition, this research can be used as the base for academics who will further study in CSFs, ERP and

project management. This can be further expanded to other countries in south Asian region to identify any

similarities in CSFs. The survey sample consists more manufacturing companies hence it will be interesting

to gather experiences from diverse industries. Nevertheless, previous studies have identified that the success

of implementation is not dependent on the industry (Garg and Garg, 2014, Stanciu and Tinca, 2013).

Furthermore, success of ERP depends on diverse factors and many could be specific to the implementations

as well hence this research has been based on the factors identified through existing literature.

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CHAPTER 2 - LITERATURE REVIEW

2.1 Introduction

This chapter focuses in providing an overview of ERP, then summarizing a definition for ERP. The theories

involved in project management, identifying CSFs and research methods will also be discussed in this

chapter. Further, this chapter deliberates the current status of ERP in Sri Lanka. Then process of ERP

implementation and how to measure the success of the implementation will be established based on the past

studies.

The main emphasis of this chapter is to identify the common CSFs to be evaluated. The factors will be

identified based on past researches. The factors which are related specifically to ERP implementations will

be considered and common factors related to any project implementations are excluded. Finally, identified

CSFs will be critically analyzed on their impact to the success as illustrated by previous studies and grouped

as tactical, strategic and cultural factors.

2.2 What is ERP

Schniederjans and Yadav (2013) have defined a business organization as a combination of multiple teams

working towards a common goal. In order to satisfy organization’s customers while earning profits, effective

and efficient integration of different teams will be essential (Tsaih, et al., 2015). Madurapperuma et al

(2007), Akkermans and Helden (2002), Garg and Garg (2014) and Naderinejad, et al. (2014) have identified

ERP system as a tool to facilitate the integration between different departments. Further, they have

highlighted the importance of understanding the concept of ERP in multiple perspectives since it is integrated

and related to whole organization. From management perspective ERP is a tool to improve resource

planning, management and operational control. Organizational integration’s perspective it is set of modules

which integrate activities across departments from customer order entry, product planning, warehouse

management, procurement and product dispatching (Lin and Ma, 2014). Chung (2007) has identified ERP as

a tool to standardize organizational processes and to adopt best practices. Therefore, it is apparent that if the

ERP is implemented successfully there will be a remarkable payback. Considering the above literature

definition of ERP can be encapsulated as a system to unify all departments together in single software on a

single database which facilitates faster and accurate information flow across the organization. A similar

definition is given by Wickramasinghe and Karunasekara (2010), Leimeister and Huber, (2009) and

Naderinejad, et al. (2014). However, the definition of ERP will not be limited to above as the scope of ERP

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cannot be established clearly and the technology is developing rapidly (Peng & Gala, 2014). Therefore, how

ERP was evolved is explored to understand the concept of ERP.

ERP is evolved from material requirement planning (MRP 1). In early stage MRP 1 was considering only

inventory control for uninterrupted production. Later, MRP 1 was developed to Manufacturing resource

planning (MRP 2) to accommodate the changes in the production schedule based on the feedback from

current production and purchase conditions (Wickramasinghe, Karunasekara, 2010, Basoglu , et al., 2007).

Then ERP was developed by making the system more robust and dynamic with considering all functions of

the organization. Currently available off the shelf ERPs are SAP, Oracle, PeopleSoft, Baan, Dynamix, Sage,

Lawson, etc. These are developed module wise by considering the industry best practices. Different modules

will be available specific to each industry. Hence selecting the required modules would be a complex and

critical process as the software which will fit best to the organization need to be picked (Perera & Costa,

2008; Cooray, 2004). Mainly if the best suitable software solution is not selected then during the

implementation, lot of customizations must be incorporated to the off the shelf software and the ERP will not

give the expected benefits (Hawari & Heeks, 2010). The selection criteria of the package will not be

discussed as it will be broader subject and the objective of this study is focused on CSFs of the

implementation phase.

As per Keller (1994) current ERPs will have following technological characteristics.

- Integration of a relational data base

- Multiple interfaces

- Open to different hardware platforms

- Client-server architecture

- Focus on supply chain

- Connectivity to internet and intranet

Therefore, ERP would require sophisticated information communication technology (ICT) infrastructure and

highly competent ICT team to maintain and facilitate the smooth operation after implementation (Lin and

Ma, 2014). Latest trend of the ERPs is to move on to cloud software in order to reduce burden of

maintaining sophisticated ICT infrastructure for organizations which needs to implement ERPs (Peng and

Gala, 2014). Also the cloud technology will increase the accessibility of the system. In other words, it will

not be necessary to come to office to use the ERP or to retrieve information from the system.

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However, ERP is also seen as a tool which complicates the business process as it increases data entry to

operational staff. Similarly system controls will set the processes to follow which will reduce the flexibility

compared to manual processes (Hedman, 2010). Further, there would not be any immediate benefit realized

for operational team who would use the system for transactional purposes (Cereolaa, et al., 2012). Therefore,

ERP is considered as a complex tool which would reduce the flexibility of business processes in traditional

business environment. Upton and McAfee (2000) have illustrated how ERPs contribute in producing

corporate information and making management decisions. Januschkowetz (2001) and O’Brien (2004) have

illustrated the interrelation of the system as per the below figure which results different uses of ERP to

different stakeholders of the organization. Hence why ERP is required for an organization should be

evaluated.

Figure 1: Business Functions within ERP systems (O'Brien 2004)

2.3 Why do we need ERP?

The definition and evolution of ERP illustrates that it is versatile software which seamlessly integrates all

departments of an organization. ERP reduces time in performing operational activities and the system

controls will ensure the accuracy of the process which enhances the efficiency and effectiveness of the

operations (Leimeister and Huber, 2009; Robert, 2011). This will result in reduction in costs and facilitate

expansion of business which is generally considered as the main purpose of ERP (T.S. Madurapperuma, et

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al., 2009; Grunert, 1992; Cereolaa, et al., 2012). The main reasons why companies implement ERP system

could be due to below reasons

1. To use single system across the organization

Organization is a combination of different activities and mostly different systems are used for manufacturing,

inventory and purchasing and accounting and financial activities. Hence maintenance of multiple systems

will be difficult and costly (Basoglu , et al., 2007). Further the systems will not be connected seamlessly.

Also there could be inaccurate data due to more manual interference in integration (Ahmad & Cuenca, 2013).

In addition, there will be a delay in reporting on organization operations since management information need

to be provided after considering multiple systems (Perera & Costa, 2008). Therefore, the organizations would

invest in an ERP system to avoid the above limitations of having multiple systems for different activities.

2. Avoid duplication of work

Due to the disintegration of different modules there will be duplication of data entry in each module (Ahmad

& Cuenca, 2013). For example, a material receipt entered in inventory module should be entered in finance

module for the payment and updating the general ledger. Perera and Costa (2008) have highlighted that there

will be inefficiency build up in the business processes and delay in providing management information due to

the duplication of data entry. They have suggested ERP systems to avoid above limitations.

3. Faster information

ERP will enable more data to be captured and then system reports to be developed. Consequently generation

of management information would be only a click of button. Further, there are business intelligence (BI)

tools which can be easily integrated with ERP system hence real time information will be provided via

dashboards to the management (Leimeister & Huber, 2009). This will enable the management to monitor the

operations of the organization and act fast if there is any crisis. In addition, currently ERPs are web based

and can be easily accessed without being in office which ensures real-time information availability (Peng &

Gala, 2014).

4. Efficient work in capital management

Since all the modules are integrated information related to purchasing, inventory, sales and debtors can be

monitored from single screen. Further, the bank or cash balances also will be maintained in the system. The

system will facilitate to identify long outstanding debtors, slow moving inventory items, aged inventory

items and also any over drawn bank balance (Scobbo, 2014). In addition, new ERPs can be set up to send the

dunning letters to the debtors automatically from the system which will automate sending the reminders and

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flowing up the debtors. Moreover, there are payment programs in built to ERPs which ensures only the

payments which are due gets paid hence it enables to use the full credit period given (Ahmad & Cuenca,

2013).

5. Standardize business processes

Lin and Ma (2014) have explaind how business processes will be driven by the system once ERP is

implemented. Hence the business process should be re-engineered based on the system which reorganizes the

perception of processes at strategic, managerial and operational levels of the organization (Ke and Wei, n.d.;

Lin and Ma, 2014). Further, the ERP will enable tight integration of all departments to achieve goal

congruence within the organization.

Above can be summarized as ERP is implemented to achieve cost effectiveness, improvement in efficiency

and better customer satisfaction. Further, an upgrade of technology is required because the technology is

developing rapidly and the capability of legacy systems will be limited (Peng & Gala, 2014). To support

organization’s growth and to stay competitive globally, a suitable new technology need to be adopted

(Grunert, 1992; Akkermans & Helden, 2002). Moreover, with the agile integration facilitated with new ERP

is expected to maintain the goal congruence within the organization (Krotov, et al., 2011). However, similar

to the above benefits ERP systems do have limitations.

2.4 Constraints and drawbacks of Implementing ERP

In order to use ERP effectively, the limitations of ERP need to be identified and managed. If not the above

discussed benefits will not be realized (Krotov, et al., 2011). The key limitations of adopting an ERP would

be as follows.

1. Costly

A cost of full scale ERP implementation in a large organization could easily exceed $100 million and the

implementation process will take at least 2 years (Chung, 2007). In Asian region, cost could not be high as

$100 million but it will be around $7 million including all the related costs such as license fee, hardware

upgrades, implementation fees, training cost, etc (Ahmad, et al., 2012). Further, significant time of the senior

management and the staff will have to be invested in implementing the system which disrupts the routine

operations, productivity losses and incur costs (Cereolaa, et al., 2012). Hence many organizations cannot

afford to invest on ERPs in full and with the partial investment allocation the implementation becomes less

effective.

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2. Difficulty in maintenance

In addition to the implementation, a maintenance contracts need to be signed with the software provider and

also with the implementation partner to maintain the system. These contracts will incur in general 20% of the

cost of the implementation which is a significant addition to the operating cost of the company (Grunert,

1992, Fang and Patrecia, 2005). Likewise, an ERP to operate smoothly after implementation hardware

support, accuracy of master data and updating the system on time with the transaction data will be essential.

As the system is new to the internal staff, they would not have required skills to maintain or troubleshoot the

new ERP hence maintenance of the system will be difficult. Inability to maintain the system properly with

correct master and transaction data will lead to frustration among users and management as the expected

benefits are not realized. (Krotov, et al., 2011).

3. Complexity in implementation

Since ERP need to integrate all departments and operations of a company, implementing an ERP will not be

straight forward. If the organization has already adopted a system, then updating to a new system will be

easier as the processes are established (Lin & Ma, 2014). But if the organization is moving from manual

process to a new ERP it will be a dramatic shift of routine processes which needs to be carefully designed.

Besides the systems are developed for general practices of the industry and region but will not match to

organizations’ process perfectly (Tsaih, et al., 2015). Therefore, company specific alterations to the system

should be adopted during the implementation. In addition, company processes should be changed to fit to the

system selected. Based on above it is apparent that adopting a new system will be complex with the unique

scenarios specific to organizations and managing the change within the staff.

4. Resistance to change

With the new system, the staff needs to be trained and made aware of the changes to the business processes.

However, training will be difficult since staff will be more focused on routine operations and there will be

less focus on the new system before implementation (Robert, 2011). Besides the staff will not be free to learn

the new system. As per Cereolaa, et al. (2012), since a different team is working on the implementation, rest

of the organization would not own the new solution and they will identify limitations of the new processes.

Acceptance of the system and support from the staff to address the initial unexpected bugs in the system will

be essential to settle the system (Chung, 2007). Therefore, an effective change management program should

be executed with the intention of introducing and settling the system among users (Bierstaker, et al., 2014).

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5. Inflexibility

With the system implementation, business processes will be streamlined and processes will be defined.

Hence the flexibility had in manual process which was based on personal competencies will be limited and

the process will be common for all (Ram, et al., 2015). Therefore, the processes will be controlled and

streamlined via the ERP. This can be identified as a limitation by the operational staff. For example, in

releasing a payment system approvals and completing all system checks (matching the invoice with Purchase

order and good receipt note) need to be followed hence urgent payments cannot be entertained without

following the system process.

6. High dependency over the system

As per Lin and Ma (2014), once a system is implemented all the business processes will be settled around the

ERP. All the operations will be captured in the system through a key stroke or an automated interface. Hence

the business will not be able to continue without updating the system. For example, in a manufacturing

organization an item cannot be invoiced if the production processes are not completed in the system even

though physically production is completed. Therefore, the organization will be highly dependent on the

system and it needs to be maintained well to avoid unforeseen system shutdowns (Cereolaa, et al., 2012).

Correspondingly the support team should be capable of restoring the system promptly in a crisis. The

company need to implement necessary plans to manage the system risk.

However, organizations invest on ERPs since it is a key tool which enables the growth of business and fast

decision making with key information. Also the disadvantages of ERP can be managed with correct

implementation process and allocating required resources (Krotov, et al., 2011, Stefanou, 2001). In addition,

ERP enables organizations to adapt to the changes in technology and external environment so as to get the

benefits of latest developments. Implementation of an ERP would assist the organization to reengineer the

business process as per industry best practices. Therefore, ERP is gaining popularity in Sri Lanka as a tool to

be adopted if the organization needs to stay competitive globally (Dharmarathne, 2004,Wickramasinghe and

Karunasekara, 2012).

2.5 ERP in Sri Lanka

Popularity of ERPs would differ based on the geographical regions (Randeree et al., 2012). As per the

findings, concept of ERP is more popular in developed countries because ERP needs complex information

technology infrastructure and skilled staff. Further, ERP is more required in manufacturing industry due to

complex nature of the operation compared to service sector. Capability maturity model (Paulk, 1994) also

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provides a similar view on the popularity of the ERP and the theory suggests that ERP would be successful

when the organization has greater knowledge and innovation which are available in companies in developed

countries. However, the expansion of such companies to other parts of the world dispersed the technology

and the knowledge to other countries. Hence it can be argued that the popularity of the practices such as ERP

are not based on the development of the country but based on the availability of the resources which can

attract the multinational companies. For instance, many multinational manufacturing companies moved to

South East Asian countries as the cost of labor was cheaper. Then the ERPs were implemented for smooth

retrieval of information for the management purpose.

Sri Lankan context of ERP practices are much similar to the developing countries in Asian Region. The

adoption rate of ERPs and latest technologies are relatively low in this region (Ahmad, et al., 2012).

However, cheaper labor and other resources in the region have attracted multinational giants and they

introduced new technologies. Sri Lankan companies like Holcim Lanka Ltd, Chevron Lubricants Lanka Ltd,

Lanka IOC PLC, Associated Motor Ways Pvt Ltd and Loadstar Pvt Ltd are examples for adopting ERPs as

their parent companies use the same. In addition to the subsidiaries of multinationals, companies like John

Keels Holdings PLC, MAS Holdings Pvt Ltd, Hemas Holdings PLC, Asian Paints Ltd, Dialog Axiata PLC,

Brandix Lanka Pvt Ltd and Aitken Spence PLC which are companies originated from Sri Lanka have

adopted ERPs (Gunawardena & Wickramasinghe, 2010). During the past two decades, information

technology (IT) service sector has mature in Sri Lanka and there are global IT companies like IFS, Virtusa

and Millenium IT based in Sri Lanka. Further, multinational IT companies like IBM, Oracle, PWC and

Accenture have established their subsidiaries in Sri Lanka thus the concept of ERP is becoming popular

within the country and region. In addition, currently the ERP software providers like Oracle, SAP, Dynamix,

etc have made bundle offers which are affordable for medium size companies and the implementation can be

completed in stages hence the investment can be made in staggered basis or once the benefits are realized

from the first stage the second phase can be started. This flexibility in implementation has made ERPs more

popular in this region (Perera & Costa, 2008).

Further, the infrastructure requirements can be outsourced and there are companies who have specialized

providing managed support services where there will not be any burden to the customer. Therefore,

embracing new technology and implementing new ERPs have become simplified and less challenging to the

traditional companies (Dharmarathne, 2004). This is one factor enabled many companies to consider

implementing new ERPs apart from the cost factor. In addition, ERP is identified as a proven tool to

streamline and standardize the business processes (Cooray, 2004). Thus companies in developing countries

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implement ERPs to reap the benefits of process improvements and to adopt best practices (Ahmad, et al.,

2012). Due to the above facts, ERPs are becoming popular in the region and also in Sri Lanka.

Currently many medium and large companies in Sri Lanka and South East Asia region considering

implementing ERPs or already have implemented ERPs. Manufacturing, telecommunication, apparel,

insurance, trading, FMCG, healthcare, printing and financial services industries have already implemented

ERPs in Sri Lanka during the last 15 years and majority of the implementations are from manufacturing

sector (Gunawardena & Wickramasinghe, 2010). Therefore, this research sample includes more

implementations in the manufacturing sector. However, Ram et al (2013) have concluded that factors

affecting the implementation success are common across industries and findings could be used across

industries as first-hand information.

2.6 ERP Implementation process

An ERP implementation is considered as a project and usual project management techniques are used to

manage the project while delivering the objectives. So that, the basic methods used to drive the

implementations cannot vary with the industry or the software (Grunert, 1992). However, each software

provider has published an implementation guide line which are differently termed but the essence of all

guidelines is same. Hong and Kim (2002) have referred new technology implementations as re-invention of

the technology and simultaneous adaption of the organizations. Further, they have given key steps of IT

implementations as development and maintenance, organizational procedures to be revised and

organization’s staff to be trained and educated. In contrast, importance of the given steps could be different

based on the nature of the organization but similar steps would be needed to complete the project

successfully (Lin & Ma, 2014). Since this research focuses on CSFs of implementation, it is imperative to

establish the criteria to recognize the success of implementation.

2.6.1 Implementation success definition and measurement

As discussed above implementation methods are well established by ERP vendors, implementing partners

and many authors. It was identified that key steps of implementations are common for all industries,

countries and software packages. Similarly the definition of success of an implementation cannot be different

by industry, country or software (Dharmarathne, 2004). Thus definition of success is deliberated using

available literature even though they are mostly based on implementations in developed countries.

Madurapperuma et al., (2009) has broadly stated that the success of a new ERP implementation is dependent

on the effective usage of the system. The effective usage of the system covers realization of the expected

13

benefits from the ERP. However, benefit realization will not only depend on successful implementation of

the project but also many other factors like company culture, level of technology literacy of staff, etc

(Wickramasinghe & Karunasekara, 2012). In contrast, it is also argued that the implementation scope will not

be limited to successful adoption of the system but also it is required to change in whole organization as

required for the system (Rabaai, 2009).

Annamalai and Ramayah (2012) have produced similar criteria to measure the success considering

achievement of objectives such as lead time in retrieving information, reduction in working capital, reduction

in transportation and logistics costs due to advanced operational planning, increase in productivity and

increase in customer satisfaction. These parameters to be measured before the implementation and compare

with the after implementation in order to recognize the success of newly implemented ERP. Further, Hong

and Kim (2002) have defined the success of ERP implementation using four metrics: reduced costs, project

completion on time, performance of the system and benefits accrued to the organization due to

implementation. Therefore, benefits expected from the system cannot be ignored when measuring the success

of the implementation. However, the implementation success should incorporate delivery on time, within the

given budget and also the achievement of desired objectives. There can be instances where the

implementation of the project is successful but the benefits to the organization are not realized as expected

due to changes in the business during the implementation phase. Also success in realization of benefits could

be subjective as expectations and the level of understanding could be different (Ram, et al., 2015).

A criterion for evaluating the effectiveness of the implementation from the user’s perspective was presented

by Rittammanart, Wongyuedy and Dailey (2003). They have defined the evaluation criteria dividing based

on four main areas as illustrated in below diagram.

14

Under technology complexity, Rittammanart et all (2003) have considered the complexity of implementation,

level of effort and skills required in system maintenance, available system security, management of user

access and user friendliness. In resource utilization, system’s ability to improve efficiency and effectiveness

in utilizing resources is considered. How accurately and fast the information is dispersed throughout the

organization to support decision making is another criterion set to evaluate the success of implementation

(Gunawardena & Wickramasinghe, 2010). Fourth criteria is how easy to implement new business processes

in the system. This is essential due to current businesses are dynamic and organizations adopt changes to gain

competitive advantage then the system should not be a limitation (Naderinejad, et al., 2014).

Another way of identifying the success of an implementations would be understanding whether the project is

not a failure. Therefore, it will be vital to define how to categorize a project as failed. Zhang et al (2005) has

stated a project is considered as failed if the implementation is delayed, going over budget and need

additional funding. A similar thought is published by Hong and Kim (2002) as an implementation deemed to

be failed if it was not completed within budgeted cost and time. An implementation can be considered as

failed if the data confidentiality was breached (Goel, et al., 2011; Akkermans & Helden, 2002). Further, if the

implementation increases server downtime and leads to system failure then the implementation can be

considered as failed. In conclusion implementation failure or success can be identified based on the following

parameters.

1. Completion on time

2. Completion within expected cost

3. Achievement of objectives

4. Resulting loss of business

ERP System

Technology

Complexity

Resource

Utilization

Information

Dissemination

Business Logic

Implementation

Figure 2: Criterion for evaluating the effectiveness of the implementation

15

Parameters one and two will determine the project governance based on the project plan. However, there can

be errors in planning stage which could result in not achievement of expected time frame and cost. Hence in

deciding the failure or success these two parameters will be given low weight (Lin & Ma, 2014). Ram, et al.

(2015) have illustrated that even without completing the implementation on time and within the budget if the

project delivers the set objectives, implementation could be considered as successful. Therefore, achievement

of objectives would be an essential parameter in determining the success of implementation. Nevertheless, it

will be subjective and not all employees will realize the achievement of objectives (Samaratunga, 2003). The

last parameter would be a measurable value by comparing before and after results of the company. In

addition, it can be measured if there were any interruption to organization’s operation in satisfying customer

orders. Also customer complaints can be used to evaluate if the new system has impacted adversely to

customers.

Further, the below table illustrates the factors to recognize the success of ERP implementation as identified in

other literature. Most of the studies have measured the success of implementation using 2 - 4 factors.

Gunawardena and Wickramasinghe (2010) have concluded that if the ERP performance is considered as

good then the implementation is successful. Therefore, considering the above findings, success of ERP

implementation can be identified by the achievement of objectives or based on the acceptance of the system

by other stakeholders.

However, implementing an ERP system is not easy and many implementations have failed. Kozak-Holland

(2007) has identified that only 25% is the success rate, the failure rate is also around 25% and 50% of the

implementations are with partial success and failure. A survey of Umble and Umble (2002) have revealed

that 65% of senior executives believe that ERP implementations have moderate chance of damaging their

business. Therefore it is important to identify the key factors which drive the implementation to the success.

2.7 Critical Success factors framework

Critical success factors (CSF) are mostly defined against the success of business operations. CSF are

operational goals which represent the success of business as per the industry best practices (Garg & Agarwal,

2014; Rockhart & Scott, 1984). Laudon and Laudon (1998) have determined CSF as a small number of easily

identifiable operational goals shaped by the industry, the firm, the manager and the environment that assures

the success of an organization. Another similar thought was presented by Hossain and Shakir (2001) and they

termed CSFs are used to identify and state the key elements required for the success of a business operation.

This research intends to apply the CSFs frame work for ERP implementations in Sri Lanka.

16

Table 1 Summary of literature: Factors to discriminate success of ERP implementation (Gunawardena &

Wickramasinghe, 2010)

Rockhart (1982) has declared that successful adoption of CSF framework will depend on the subjective

ability, style and perspective of the executives. Further, he has explained four perceptions that need to be

considered when developing the CSF framework. The perceptions are industry, operational strategies,

managers’ perception and changes in the environment. In developing the CSF framework for ERP

implementation, operational strategies perception is considered because ERP implementation require sound

knowledge of business practices and implementation process is more operational (Seddon and Shang, 2002).

Therefore data need to be collected covering all stakeholders.

2.8 Critical Success Factors

This paper attempts to identify CSF empirically and rank the factors that conduce to success of the

implementation in Sri Lanka through a survey. Available literature on critical success factors can be

summarized as per table 2. Most of the literature on ERP implementations are case studies which cannot be

generalized but lessons can be learned from the implementation experiences illustrated in case studies

(Arnold, 2006; Avison and Malaurent, 2007; Davison, 2002; Sheu et al.,2004; Soh et al. 2000).

17

Out of the factors in table 2, the factors which are considered by most of the academics are used for this

research. The factors are categorized to represent three key aspects affecting the implementation success as

cultural, tactical and strategic (Kuang et al., 2001). Most of the authors have categorized as strategic and

tactical factors without highlighting cultural factors. However, in Sri Lanka and south East Asia, culture

plays a major role in organization (Ahmad, et al., 2012; Belassi & Tukel, 1996). Therefore, cultural factors

are separately considered for this research.

2.8.1 Cultural Factors

In Asian countries culture plays a pivotal role in driving change, learning, team work, etc which are key

factors required for a successful implementation (Wickramasinghe, Gunawardena 2010). Since Sri Lanka is

an Asian developing country the cultural factors affect the success of the project which need to be considered

separately. Change management, organization culture and composition of the core team are grouped as CSFs

represent the culture (Rabaai, 2009). However it is argued that cultural factors are not uniquely related to

ERP implementations but in general cultural factors are impacting all operations of the organization. Hence

the cultural factors need not to be considered as CSF (Lu, et al., 2008). In addition, culture is a broader area

which cannot be represented with few factors but it need to be studied as a separate subject. Nevertheless,

culture of an organization is imperative factor in achieving any objective successfully

Therefore, it cannot be ignored in identifying the CSFs of ERP implementations (Yingjie, 2005). Hence

Change Management, composition of the core team and Organization culture are considered to represent

culture.

2.8.1.1 Change Management

Grabski, Leech, and Lu (2000) have identified that user resistance has been with any type of system change

and the resistance will be more for a complex tool like ERP. The resistance is mainly due to the fear of losing

the job with the improvements in the system or due to the disturbance to their routine work life (Rabaai,

2009, Bierstaker, et al., 2014). Hence the process changes will be highlighted as reasons for reduction in

efficiency. Further, Ahmad and Cuenca (2013) have mentioned that the integration of ERP which will drive

the organization in the same phase will require all employees to perform their duties on time if not there will

be disturbances for the organization’s operations and it will be highlighted.

18

.

This transparency in work and loss of freedom are other reasons which increases the resistance. But if the

organization culture is open for change and embracing process improvements there will not be any resistance

for change. Therefore, change management is directly linked with organization culture, the importance of

change management in implementing an ERP is determined by prevailing organization culture (Hedman,

2010). Hence Change Management is considered as a CSF representing Culture in this study.

Value Chain

Connectivity

Interdepartmental

corporation

Managing user

expectations

Business plan and

vision

Project champion

Effective

communication

Software

Post Implementation

Support

Project team

composition

Monitoring and

evaluation of

performance

Implementation

Partner

Project Planning

Change management

Organization Culture

Previous exposure to

ERP

User training

Project management

Top management

support

Al-

Mash

ari

, et

al.(2

003)

xx

xx

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Bajw

a, et

al.(2

004)

xx

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xx

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Bin

gi,

et

al.(1

999)

xx

xx

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Buckhout, e

t al.(1

999)

xx

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Dem

bla

, (1

999)

xx

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Duchess

i, et

al.(1

989)

xx

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Ehie

& M

adse

n(2

005)

xx

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Ehie

and, M

adse

n(2

005)

xx

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Falk

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et

al.(1

998)

xx

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ney, &

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ett

(2007)

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Garg

eya, &

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dy(2

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nd a

nd L

ight(

1999)

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Jafa

ri, et

al.(2

006)

xx

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000)

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unase

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n(2

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xx

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Manth

ou, et

al.(1

996)

xx

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Motw

ani,

et

al.(2

005)

xx

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ate

llo , &

Chen(2

008)

xx

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xx

xx

xx

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Nah, et

al.(2

001)

xx

xx

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x

Ngai,

Law

& W

at

(2008)

xx

xx

xx

x

Robert

s and B

arr

ar(

1992)

xx

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Rosa

rio, (2

000)

xx

xx

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x

Sam

mon, A

dam

, &

Carl

sson (

2009)

xx

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Sam

mon, et

al.(2

009)

xx

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xx

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x

Seid

el &

Back(2

009)

xx

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Som

ers

and, N

els

on(2

001)

xx

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Sum

, et

al.(1

997)

xx

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Sum

ner

& B

radle

y (

2009)

xx

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Sum

ner,

(1999)

xx

xx

xx

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Sun, et

al.(2

005)

xx

xx

xx

xx

xx

x

Um

ble

, et

al.(2

003)

xx

xx

xx

xx

xx

Wee, (2

000)

xx

xx

xx

xx

xx

xx

Woo (

2007)

xx

xx

xx

xx

xx

Yokota

, (2

007)

xx

xx

xx

xx

Yusu

f, e

t al.(2

004)

xx

xx

xx

xx

Zhang, et

al.(2

003)

xx

xx

xx

xx

xx

To

tal

Co

un

t1

35

81

51

61

71

71

81

91

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02

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tical

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ss F

acto

rs

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tho

rs

Tab

le 2

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mar

y o

f li

tera

ture

: C

SF

use

d b

y o

ther

auth

ors

19

2.8.1.2 ERP Core Team composition

Who is selected as the ERP core team will be another factor identified as a CSF. The team need to be

balanced with mature and young, experienced and new to the company (Ram, et al., 2015). Further there

should be sufficient number of members to handle the work load based on the scope of the project.

Furthermore, the involvement of members between the business and implementation also need to be

considered. Sufficient time should be spent in providing the requirement and finalizing the solution. Next

would be testing and signing off the system configured and finally leading the training would be key

responsibilities of the core team (Cereolaa, et al., 2012). Further, the core team will be change management

agents who will drive the change and manage the resistance for change. Hence the composition of the core

team should not be merely based on technical skills but organization culture need to be considered.

Senarathna and Warren (2014) have highlighted that the core team’s tasks could be more technical, they will

be the agents in settling the system thus the composition of the core team need to be different depending on

prevailing organization culture. As per above, it is apparent that core team plays a pivotal role in

implementation and the team need to be selected carefully to enable the smooth flow of all activities.

Accordingly, composition of the core team is considered as CSF representing cultural factors.

2.8.1.3 Organization Culture

A culture with shared values and common objectives is conductive to success because it emphasizes

continuous improvement and empowers willingness to accept new technology. As explained in above,

requirement of change management and acceptance of the system depend on organization culture but only

those two factors will not be sufficient to represent the impact of culture on an implementation (Senarathna &

Warren, 2014). Therefore, organization culture in general is added as a CSF. This will provide flexibility to

capture importance of organization culture irrespective of change management and composition of the core

team.

As per Basoglu , et al. (2007), human factors are not easy to handle compared to technical problems hence

the cultural factors set an unneglectable effect on the success of ERP implementation. Significance of culture

can be well explained when two similar companies implement the same ERP but results are different.

Change management and ERP exposure of the organization are considered to be more tactical factors than

cultural factors in some academic journals but as explained in above they are taken as more relevant to

culture when ERP implementation success is considered (Ke & Wei, 2008).

20

2.8.2 Strategic Factors

Holland and Light (1999), Pinto and Slevin (1987) and many other academics have considered strategic and

tactical headings to differentiate the CSFs. Strategic issues to specify the direction of the company and

synchronization of the technology adopted with organization vision. CSFs such as selection of Training,

selection of the ERP implementation partner, level of top management involvement and Project management

are aligning the support expected from technology with business strategy. How the above factors play a vital

role in success of ERP implementation will be illustrated below.

2.8.2.1 Implementation Partner

After the software is purchased, implementation partner plays a pivotal role in establishing the system to

achieve organization’s objectives. The consultants engaged in software selection need not to be the

implementers (Peng & Gala, 2014). Implementations usually spread across a year or longer, then post

implementation support will be critical to settle the system hence the implementation partner should be

strong enough to provide uninterrupted service throughout the period may be for about 3 years. The partner

should possess a good bank of skilled consultants in order to continue the support and also to bring the best

practices from their experience in other implementations (Robert, 2011). Therefore, implementation partner

becomes a CSF due to the value addition created by them.

The implementation partner becomes a strategic choice as it determines the level of change expected within

the organization with the ERP (Stanciu & Tinca, 2013). Based on the exposure of users and the skills of

internal Information and Technology department, support required for the implementation and maintenance

of the system will be determined (Leimeister & Huber, 2009). Hence after assessing the internal strengths, a

partner need to be selected in order to drive the implementation to achieve required objectives. Based on the

above academic findings, implementation partner is considered as a CSF under strategic factors.

2.8.2.2 Top Management Support

Top management must be a part of the implementation. Bingi et al (1999) has illustrated that for

technological development projects top management support is critical as it should be driven by top to

bottom. But in many organizations, still the top management believes that IT implementations are primarily a

function of technological development and the responsibility is assigned to IT department (Ke & Wei, 2008).

Laudon and Laudon (1998) have demonstrated implementing an ERP system is not a matter of changing

software systems; rather it is a matter of repositioning the company and transforming the business practices.

21

Further, top management needs to publicly and explicitly identify the project as a top priority (Bingi, et al.,

1999). Then the message is passed across the organization to consider the ERP project seriously and give

priority. Therefore, Top management support is identified as a CSF driving the project success.

Since the top management poses the vision and plan how the business will be driven, they will be the agents

to synchronize the ERP with the business strategy (Scobbo, 2014). In addition, top management need to

realign the organization based on the new ERP and publish new policies, changes to organization structure to

adopt the best practices with the new system (Hedman, 2010). Further, all these changes need to be in line

with the business strategy enabling the company to achieve short term and long term goals. Therefore, top

management support can be considered as one of the key CSFs representing business strategy.

2.8.2.3 Project Management

An implementation project will include series of activities, tasks, multitude of stakeholders, quick decision

making and coordination. Ensuring the activities are well planned and completed will be the key role in

Project Management (Hedman, 2010). Then including the unplanned activities to the project plan and

prioritizing activities will be another challenge. Further, reporting the project status and highlighting any

risks to the steering committee also will be tasks under project management (Grunert, 1992). Therefore,

effective project management will be key to drive the project to success. Due to the complexity of the

project, coordinating and driving the activities will not be mere operational work. But managing it without

disturbing to routine operations and the project delivery on schedule will be a strategic task (Ram, et al.,

2015). Hence project management is a component of the strategic factors.

2.8.2.4 Training

In any implementation of new process or a system, training is a CSF (Grabski, Leech, and Lu, 2000). Hence

it can be argued that it is not only related to ERP to consider it as a CSF which determines the success of the

implementation. Since ERP is a complex system, training need to be comprehensive and training will have to

be repeated. Further, there will be many difficulties in conducting training for an ERP as it will be new and it

will change the users’ routine work. The resistance to change will also impact the success of training

program as the users need to be motivated to participate and learn.

Further, unless the organization’s senior management promotes learning and development, there will not be

any interest in learning. Hence organization strategic direction enhances the effectiveness of training

(Wickramasinghe & Karunasekara, 2012). Furthermore, training is considered as a CSF factor because

22

effectiveness of training will affect the effective use of new ERP after implementation (Rabaai, 2009). Also

strategically management need to decide who will be trained as they will be the next management team of the

organization. Therefore, training is categorized as a strategic CSF.

2.8.3 Tactical Factors

Based on the strategic and cultural factors, tactical factors need to be developed in order to complete the

project successfully. At the end, in the given culture with set strategy, tactical factors would be the most

critical to complete the project successfully (Krotov, et al., 2011). Likewise, Robert (2011) has stated that

cultural factors will assist in understanding the environment while strategical factors will set the road map

with the deliverables but tactical factors will only enable successful completion. However, tactical factors

will be common for most of the projects. In this research, project planning, close monitoring and evaluation,

software package, exposure of the organization to ERP and post implementation support are considered as

tactical factors which are specific to implementations (Akkermans and Helden, 2002, Hawari and Heeks,

2010). These tactical factors will enable the smooth flow of events during the implementation which will be

key to successful completion.

2.8.3.1 ERP software package

The selection of software is a key element which enables the achievement of organization’s requirements. If

the wrong product is selected then implementation process will be complex and many customizations will be

needed to cater the organization’s requirements. As a general rule an ERP should be implemented with

minimum customization in order to get continuous support from the software vendor and upgrading the

software will be complex after customizing the software (Perera & Costa, 2008). In addition, customizations

will need more effort and time hence there is a high chance for over spending the budget and not completing

on time if the selected software is not suitable. Also, the customizations will obstruct adoption of best

practices and business process re-engineering to enhances the efficiency of the operations (Ahmad & Cuenca,

2013; Bingi, et al., 1999).

Also ERP software need to be selected in line with the business operation. An investment in technology need

to be decided based expansion expected in operations and how fast information is required for decision

making. In operating the business effectively and efficiently lot of data to be analyzed and many scenarios

need to be considered then the complexity of required ERP will be different (Letiche & Moriceau, 2014).

Therefore, selection of the software is considered under tactical factors.

23

2.8.3.2 Project planning

Another CSF deliberated under tactical factors would be Project Planning. This will include how the overall

implementation project will roll out. For instance, under project planning, the implementation could be

divided in to different phases and it can be planned to implement the complex modules once the basic

modules are settled which will enable a successful implementation (Shatat, 2015). Also the cut over strategy

would be another key milestone to be planned. That will decide how the organization will migrate to new

system (Naderinejad, et al., 2014). It is apparent that all the key tactical decisions are made under project

planning. Thus, it should be aligned with the business operations and should facilitate smooth transition.

Another key requirement in planning would be that plan should be achievable and challenging hence

optimum efficiency during implementation will be achieved. Accommodating unplanned events, deviations

in activities from the schedule and re-planning activities to minimize the impact of unforeseen events in

completing the project on time successfully. Fang and Patrecia (2005) have established that comprehensive

project planning is essential to ensure the success of the project. Since an ERP implementation will not be a

short-term assignment but it is a journey to improve the processes, project planning will not be merely an

operational task but a strategic element in the management of the organization (Ehie & Madsen, 2005). In

addition, project planning is one of the key elements in project management which is separately identified in

this research to highlight the importance of planning in delivering a successful implementation (Aldammas &

Al-Mudimigh, 2011)

2.8.3.3 Post Implementation Support

An ERP implementation will not be completed with marking the “go-live”. It is more difficult to maintain

and settle a new system than configuring and implementing hence more effort and expertise are required for

post implementation support (Schniederjans & Yadav, 2013). Further, a comprehensive post implementation

support becomes essential because the system will be new to all users, there will be knowledge gaps, systems

bugs, re-alignment in operational processes and most importantly organizations operations should not be

interrupted hence all the issues occurred need to be resolved immediately (Wickramasinghe and

Gunawardena, 2010; Hedman, 2010 (Belassi & Tukel, 1996)). Therefore, post implementation support

should be strategically decided considering the operational requirement to avoid interruption to business.

In addition, in the long-term organization need to determine how the ERP will be maintained, whether the

support will be outsourced or internally required skills will be developed. A cost will be involved in post

implementation support hence based on the business operations, most suitable and economical post

24

implementation plan should be selected (Hawari & Heeks, 2010; Bingi, et al., 1999). As per above Post

implementation support is considered as a CSF under tactical factors.

2.8.3.4 Close Monitoring and Regular Evaluation

Any project need to be continuously monitored and validate the assumptions made during the planning stage.

Changes in the assumptions need to be identified and the plan should be changed accordingly. Further

unexpected events and activities which are not completed as per the plan need to be considered and the

project activities need to be re-aligned (Letiche & Moriceau, 2014). As per the above illustration close

monitoring and regular evaluation would be necessary for completing the project successfully. However,

Akkermans and Helden (2002) and Grunert (1992) have argued that monitoring and evaluation is part of top

project planning or project management as both factors cover monitoring and evaluation. The perception

covered in continuous monitoring and evaluation in day to day activities by the implementation team but

project management will be more in senior level and only major deviations will be highlighted in steering

committee (Leimeister & Huber, 2009). Thus it is identified as a separate CSF under tactical factors.

2.8.3.5 Exposure of the organization to ERP

Perera and Costa (2008) have claimed that methodology of the implementation will be determined based on

the ERP experience and knowledge available in the organization. If the organization is already using an ERP

then the company is exposed to key characteristics of ERPs such as integration, system controls, work flows,

etc and the organization culture is used to ERPs. Also the staff will be exposed to system terms and less

effort in training the new system will be required (Ram, et al., 2015). In addition, since the organization is

operating based on system process outlining the requirement and developing the new ERP will be easier.

However, exposure to different systems could lead users to compare the new and old systems and complain

on the complex processes in the new system (Letiche & Moriceau, 2014). Further, changing the users to new

process also could be difficult as they are used to the previous process without understanding the business

operation. Hence previous exposure of the organization to ERP is considered as a CSF. The level of exposure

to ERP will determine the tactical activities of the ERP implementation therefore it is considered as a tactical

factor.

2.9 Conclusion

After reviewing the existing literature on ERP and CSFs of implementations, the objective was to present

further evidence on CSFs of ERP implementations for Sri Lankan companies. Due to the complexity of

implementations, it is important to review the experiences of earlier implementations and identify the key

25

factors to focus. But literature regarding Sri Lankan companies were less hence this study will be useful for

Sri Lankan companies pursuing ERP implementations.

As per the literature, ERP and the success of ERP implementation can be defined in many ways. ERP is

regarded as a single integrated system facilitating all activities of an organization. An implementation is

considered as successful if the benefits of the ERP is realized. After evaluating 18 CSFs 12 most common

CSFs were identified to further review. Top management support, Project management, User training,

Organization Culture and Previous ERP exposure were identified as CSFs by many authors. It has been

established that all the factors are inter-related. The identified CSFs were grouped as tactical, strategic and

cultural factors for evaluating the most important base for a successful implementation. As per the literature

strategic and cultural factors were significant than the tactical factors for the success of the implementation.

26

CHAPTER 3 – METHODOLOGY

3.1 Introduction

The main objective of this study is to identify the CSF of ERP implementations and their relationship with

success of implementation. Literature review in chapter 2 will support in understanding the theoretical

background in relation to this study. Methodology chapter will provide the basis of how the research is being

carried out. This paper measures ranks of each CSF and calculate the statistical correlation with success of

implementation. Further, CSFs are grouped based on the past literature and the most significant CSF group is

identified. Finally a regression model is presented to forecast the success or to assess the readiness of the

organization for a successful implementation.

3.2 Research Definition

Management research is concerned not only with understanding the nature of organizations but also with

solving problem related to managerial practice (Bryman & Bell, 2007). Thus business research is considered

to as an applied filed. Creswell (2008) has defined research as a process of steps used to collect and analyze

information to increase our understanding of a topic or issue. Further, a research should include a question,

collection of data to answer the question and recommending the most suitable answer. However, Reay, Berta

and Kohn (2009) have found that none of the organizations has improved performance by using evidence

based management. Entrepreneurial success is mostly due to the decisions with gut feeling and findings of

researches are used to enhance the knowledge in order to enhance the probability of success.

This is a deductive research as it is based on currently available research findings and tested the same with a

survey for applicability of the findings in Sri Lanka. After reviewing existing literature on ERP, key benefits

and limitations, CSFs of ERP implementations and ERPs in Sri Lanka, how the research problem will be

addressed in this research need to be decided. As defined previously, objective of this research is to identify

the key factors affecting the success of ERP implementation. Most appropriate 12 variables are selected as

explained in chapter 2 for this study considering Sri Lankan context. Further, based on the previous

academics the variables are grouped as strategic, cultural and tactical factors. The conceptual frame work for

this research can be demonstrated from below diagram.

The CFSs identified from empirical research will be the independent variables. The data will be collected as

ranks. Dependent variable would the success of the implementation. 12 factors which were deliberated by

other authors have been considered as the independent variable (table 2). The factors were grouped to 3 main

27

categories based on the past literature with a view to identify the most important category in ERP

implementation and the contribution on each category for the success of the implementation.

Figure 3 Conceptual frame work

3.1.1 Variables

In addition, demographic information was not collected via the survey as it has less relationship on the CSFs

as per previous academic findings. However, to cover the descriptive analysis and to understand the

participants of the survey based on their level of exposure and involvement in the ERP implementation were

inquired in the survey.

3.1.2 Research Objectives Validation Criteria

The research questions were tested using the statistical software to determine the correlation and regression.

Based on the correlation, it is anticipated to identify the most critical factors statistically. Statistical analysis

will be carried out in two phases, first individual variables will be tested then the grouped variables will be

considered. Finally, a regression model will be fitted to identify the most significant factors.

CULTURAL

Change Management

ERP core team composition

Organization Culture

STRATEGIC

Top Management support

Training

Implementation Partner

Project Management

ERP

IMPLEMENTATION

SUCCESS/FAILURE

TACTICAL

Software / ERP Package

Monitoring and evaluation

Previous ERP exposure of the organization

Post Implementation support

Project Planning

28

3.2 Research Philosophy

Based on Saunders , et al., (2007) research onion classifications, this research is based on epistemological

positivism philosophy since the research uses quantitative data survey and previous academic findings as a

base of the study. The previous findings will be used as a base of this research and the objective would be to

identify the most influential factors in Sri Lankan context. Closed questions with ranking, rating and

categorical answers were selected to gather data as if the qualitative data is collected and interpreted to ranks,

there can be errors in interpretation (Bryman & Bell, 2007). The findings of the research may not be valid if

the research was structured based on qualitative data hence interpretivist philosophy was not selected for this

study.

3.3 Research Approach

A research could be mainly approached in two ways. One approach could be developing a new theory

starting with observations then testing tentative hypothesis and developing a theory which is called as

inductive approach (Bryman & Bell, 2007). The other approach is deductive approach; it will be based on

existing theory and testing against the validity of the same theory. The result of the research could be the

confirmation of the existence of the theory or any new findings will be added to the theory (Saunders , et al.,

2007; Sekaran & Bougie, 2009). In this research, concept of Critical success factors is tested against the ERP

implementation success. As this research is based on existing theory, the research is based on deductive

approach. Based on CSFs theory the factors contribute to success of the implementation are identified in this

research.

3.4 Research Strategy

Saunders (2003), define research strategy as a general plan that helps researcher in investigating the research

questions in a systematic way. Examples of research strategies would be survey, case study, experiment,

action research, grounded theory and ethnography. In order to achieve the research objective, survey research

strategy is used to identify people’s opinion on CSFs. Key advantages of using a survey which is easier to

administer, several questions can be included in one survey, capable to reach large number of respondents

and can be administered remotely (Bryman & Bell, 2007; Creswell, 2008). However, the surveys may not

reveal accurate and honest answers since it is conducted remotely. The respondents might fill it up randomly

rather answering the questions as individual attention is not given. Further, respondents might not understand

and interpret the questions the way researcher anticipated hence incorrect answers would be given

29

(Wickramasinghe & Gunawardena, 2010). To validate the interpretations and the clarity of survey questions,

the questionnaire can be tested with few independent respondents before the final survey.

3.5 Data

Based on the sources of data, it can be categorized as primary or secondary data. If the data is collected based

on the research objective, then it would be called primary data. Secondary data would be the use of data

which is already collected for a different purpose (Bryman & Bell, 2007). Previous academic findings were

referred with the purpose of identifying the CSFs linked with ERP implementations. Thus, CSFs were

identified using the secondary data. It was set as the base for the research. Then primary data need to be

collected to achieve the research objective using a data collection tool in the selected sample.

Data collection tool should be synchronized with research strategy. Examples of tools would be a check list,

interviews, questionnaires and observation. For survey research strategy, data collection tool would be a

structured questionnaire. A questionnaire will include standard set of questions which will explore the

research objective and collect information on the respondent’s opinion (Gunawardena & Wickramasinghe,

2010). For this research, closed questions were used with specific answers to be selected by the respondent.

Further, the questionnaire was built in a way the participants need to provide an answer from the given

selection without giving other comments. This helps in terms of getting structured data then in making

inferences but it may not be the real opinion of the participant (Alvesson & Deetz, 2000). Similarly in

providing the ranks, it was restricted giving the same rank for two variables with the intention of eliminating

ambiguity in research findings. Hence the respondents are forced to rank the variables carefully (Creswell,

2008). However, this could lead providing inaccurate data since the participants do not have the flexibility of

providing the answers as they desire (Dharmarathne, 2004).

3.5.1 Population and Sample

As stated in the previous chapter, the objective of the research is to identify the CSFs affecting the success of

ERP implementations in Sri Lanka. Hence the population is defined as Sri Lankan companies who have

implemented ERP within last 15 years. There are no published records of the companies that have

implemented ERPs hence the population was identified by asking the main ERP vendors in Sri Lanka and

through industry contacts. Thus sampling frame is not complete and up-to-date (T.S. Madurapperuma, et al.,

2009).

30

Snow ball sampling method which is a non-probability sampling process was used as the companies were

identified via the contacts. Saunders , et al. (2007) states that snow ball sampling process is one of the

popular form used for studies including surveys. 10 implementations were selected then a questionnaire was

shared among the users, management, ERP consultants, observers and Core team. 15 members from each

implementation were selected covering the above audience to participate in the survey (Ahmad & Cuenca,

2013). However, the challenge was reaching users, implementers, top management within the companies.

Then they were approached via the contacts in the organization which is again snow ball sampling.

3.5.2 Questionnaire

The questionnaire was prepared by using similar format and questions used by other academics such as

Gunawardena and Wickramasinghe (2010) and Dharmarathne (2004). All the CSFs were identified using

previous studies (table 2). The questionnaire was prepared with closed end questions and it included only 30

responses which can be completed within 5-10 minutes to enhance the response rate (Bryman & Bell, 2007).

Before circulating the questionnaire, it was sent to few participants and taken feedback on the

understandability and interpretations of the questions. In addition, since a web-based questionnaire was

created, automated validations were used to avoid incomplete and inaccurate data.

3.5.3 Data Collection

The questionnaire was created using www.surveymonkey.com and the link was shared with the respective

participants. Initially tried sending the email notification requesting the completion of the survey which failed

as most of the emails were filtered as junk emails and was not received by the selected participants.

Therefore, the link was shared using a personal email. Since in most of the organization the contacts

available were not sufficient to cover all the audience groups, it was requested for the contacts to share the

link with the respective other groups. The idea of getting opinion form different stakeholders is to cover the

different perceptions of CSFs on ERP implementations.

The questionnaire was sent to 150 individuals in 10 different companies as per the objective. Three

individuals from each category of users, management, observers, core team members and consultants were

intended to approach. One limitation was in reaching the core team members, consultants and management

members was, some of the members involved in the implementation have left the respective organization.

The questionnaire was kept open for 16 days and 93 responses were received out of the 150 individuals.

Mostly the individuals who are currently involved in ERPs have responded. Another limitation was for few

implementations ERP vendor and implementation partner were the same organization. Hence finding 30

31

different individuals under ERP vendors were difficult. However, the questionnaire was sent to 30

individuals in ERP vendor’s Sri Lankan office and the agents of the ERP vendors in Sri Lanka.

When analyzing data, it was identified that the respondents have not selected the group they were intended to

represent. Also the sample could not be selected equally from each ERP package as mostly SAP and Oracle

packages were used. Consequently, data collected will be analyzed to identify any variations are there based

on the software package.

3.5.4. Strengths and Limitations

Online questionnaire was a convenient method to collect data and it allowed to reach the required audience

(Bryman & Bell, 2007). Since the population was not well defined and snow ball sampling method was used,

the data collecting tool had to be flexible and simple. Online survey link could be shared easily with the

identified respondents and then they could easily share with the other respondents (Creswell, 2008).

However, it will be difficult to reach the respondents who does not have internet access to collect data. As

this was survey is related to ERP, all the respondents were computer literate, hence reaching the respondents

with online survey method was not a limitation but an advantage (Garg & Garg, 2014).

Further, it was easier to develop online and administer compared to other data collecting methods. Another

advantage was the responses given could be validated at the point of data entering and data could be directly

collected in the format to analyze (Saunders , et al., 2007). In this survey, key data collected was the ranks of

the critical success factors and the data was collected in a way that respondents cannot enter same rank for

two factors (Gunawardena & Wickramasinghe, 2010). In addition, collection of data and some basic

statistics could be monitored during the data collection period to validate the reliability of the data collected.

Hence the online survey method enabled collecting useable data faster with less cost (Bryman & Bell, 2007).

As the respondents were not tracked personally and they were identified only via a respondent ID created at

the point of data entry hence the respondents would be more comfortable in expressing their views compared

to a physical data collection technique or an interview (Creswell, 2008). Conversely not having personnel

touch in collecting data could lead to non-reliable data as there is no provision to clarify the questions. Thus

the respondents might not understand and interpret the questions in the same way the questionnaire was

designed (Bryman & Bell, 2007; Alvesson & Deetz, 2000). Moreover the respondents may not be

encouraged to provide accurate and honest answers instead they might choose the easiest path to complete

32

the questionnaire. In addition, there can be non-responses leading to data errors and then incorrect findings

(Reay, et al., 2009).

3.5.5 Data Analysis

In order to analyze data, Microsoft excel and SPSS tools were used. Since SPSS outputs are not reader

friendly most of the figures and tables used in the research are generated in excel.

Data was directly downloaded from the online survey site and the descriptive analysis was carried out in

excel. The data was loaded to SPSS for inference analysis. Correlation and regression analysis were carried

out under inference analysis.

3.6 Conclusion

This chapter illustrates how the research will be carried out and explains theories used in building up the

scope of the study. CSF frame work is adopted and main 12 factors are identified using prior studies by

following the deductive approach. Then priority of the identified CSFs will be surveyed among individuals

involved in ERP implementations in Sri Lanka. The sample is identified through snow ball sampling and data

is collected through an online questionnaire. Also it was noted that there is no published data on the

companies who have implemented ERPs hence identifying the population was ambiguous. The sample was

limited to 10 companies who have implemented a complete ERP within last 10 years and responses will be

taken from 15 individuals involved in ERP implementation covering all the perceptions.

The collected data will be initially analyzed using descriptive statistical measures and a common rank for the

CSFs will be derived. Further, the collected data will be evaluated to identify if there is any difference in the

significance of CSF based on the ERP package used or by the respondent’s exposure to ERP. Then the data is

statistically evaluated to identify the correlation between the CSFs and to identify the factors which are

significantly correlated with success of implementation. Finally, a regression model will be fitted to identify

the most significant CSFs. In addition to the individual factors, the research identifies three main categories

as cultural, tactical and strategic factors and they are also evaluated statistically to identify the key categories

to be focused to achieve successful implementation.

33

CHAPTER 4 – DATA ANALYSIS

4.1 Collection of data

93 responses were received during a period of 2 weeks from the sample of 150 including users, observers,

functional consultants, core team members, implementation partners and ERP vendors of 10 different

implementations in Sri Lanka. Saunders (2007) has identified usual non-response rate as 35% and this survey

had 38% non-responses. Collecting data is considered as one of the most challenging tasks in research and

response rate above 50% could be satisfactory. Out of the 93 observations collected 84 were complete and it

is a sufficient collection of data for inference analysis (Bryman & Bell, 2007). Therefore, it was decided to

proceed with the further analysis only considering the complete responses. It eliminates erroneous

conclusions due to incomplete response (Pigott, 2001).

4.2 Descriptive Statistics

In identifying the composition of the sample where the data is collected, descriptive statistical analysis will

be carried out. The figure 4 illustrates the respondents’ exposure to ERP. As the subject of ERP is a

specialized area and the participants of the survey need to be exposed and familiar with the concepts of ERP

to achieve valid results (Bryman and Bell, 2007;Tsaih, et al., 2015). 68% (57 respondents) of the

observations are received from the individuals who are certified consultants or who have experience in ERP

implementations who can be considered as experts in ERP. Rest of the responses (32%) are from the

individuals who are new to ERP or only have used ERP.

Figure 4 Composition of Respondents based on Knowledge in ERP

34

When it is further analyzed on the 32% (Table 3), which indicates that the majority of them are involved in

ERP implementations (Core team members, implementation partners, functional consultants or ERP vendors)

but with less experience in EPR implementations. Hence all respondents can be considered as exposed to

ERP and majority (86%) as exposed to ERP implementations.

Table 3 Composition of New to ERP respondents

When ranking the CSFs, data will be further analyzed by the exposure to ERP to identify if there is any

difference in the findings. Table 4 demonstrates that most of the respondents have experience in SAP and

Oracle implementations. For further analysis, all other software will be considered as other. Below table also

shows that 33% (28 respondents) of the respondents are functional consultants and 25% (21 respondents) of

the respondents are core team members of implementations. Therefore, it is apparent that majority of the

responses are from individuals who are heavily involved in ERP implementations and the view of the user or

observers will not be prominent. The advantage would be that the findings will be valid as they have

comprehensive experience in implementations but the findings will not include all perceptions as expected.

For SAP and Oracle software’s all stakeholders have responded but still the results will be biased as

explained above.

Table 4 ERP software Vs Respondents' level of involvement

In inference analysis, software will be considered as SAP, Oracle and Other in order to determine if there is

any difference in CSFs of implementation.

Your knowledge in

ERP User

Implementation

Partner

Core Team

Member

Functional

Consultant Observer

ERP

Vendor

Grand

Total

Have used ERP before 6 2 4 1 2 1 16

New to ERP 5 3 1 2 11

Grand Total 11 5 5 3 2 1 27

Level of  involvement in the Implementation

SAP Oracle Infor Other IFS

Microsoft

Dynamics

Grand

Total

Functional Consultant 14 9 4 1 28

Core Team Member 9 6 1 1 3 1 21

User 7 2 1 1 1 12

Implementation Partner 3 5 2 1 1 12

Observer 2 2 2 6

ERP Vendor 1 1 2 1 5

Grand Total 36 25 10 5 5 3 84

ERP software

Level of involvement

35

Figure 5 Relevance of Industry to implementation success

Out of the complete responses received, 55% (46 respondents) believe that the industry is not relevant in

determining the success of the ERP implementation. 15% of the individuals (13 respondents) have responded

as it will be easier to implement in manufacturing industry and 17% (14 respondents) believe the

implementation would be easier in trading industry. If it is further analyzed by the stakeholder groups, most

of the functional consultants, core team members and implementation partners think that the industry is not

relevant in making an ERP implementation a success. In inferences analysis, it can be investigated if there is

any relationship between industry and the CSFs.

Further, it was surveyed whether the exposure of the company would impact the success of the ERP

implementation. Figure 9 illustrates that 50% of the individuals (42 respondents) think it would be easier to

implement when it is the first ERP experience in the organization. 27% of the responses (23 respondents)

denote that if the first-time experience and the operational processes are set up implementation would be

easier. It is vital to note that 23% of the respondents (19 respondents) think exposure of the company is not

relevant for the success of ERP implementation. It seems that changing a system over a legacy system is less

preferred.

As per the above descriptive statistics it is apparent that the responses are received from the ERP experts and

the responses will not cover all the stakeholders’ perception in the findings. However, ERP been a

specialized area the data received would be reliable and valid as they are mostly provided by the individuals

who are heavily involved in ERP implementations.

36

Figure 6: Exposure of the company

4.3 Descriptive analysis of critical success factors in ERP implementations

As explained in chapter 3, the respondents were requested to rank the CSFs identified using previous studies.

The respondents could not provide the same rank for CSFs hence they were compelled to prioritize the 12

factors and this will help to identify the key CSFs (Perera & Costa, 2008). Since the data is collected in ordinal

scale, mean of the ranks cannot be calculated. Hence the given data is summarized using median and mode

with the aim of identifying the top CSFs (Chung, 2007). Also the sum of ranks of each CSF is taken a as a

general score to identify the criticality of the factor (Fang & Patrecia, 2005).

As per table 5, the rank derived from score, mean and median are same. However, when mode is used for

ranking there is a change in organization culture. As per the mode, culture is prioritized as the sixth CSF but

all other measures prioritize the same as the third CSF. Mode represent the rank preferred by most of the

respondents. Since this survey is not measured with scale data, mode will be a good measure for identifying

the preference of the CSFs. Median could be a good measure to identify the key CSFs as it will be based on

the center of the ranks received and will not consider if there are any extreme observation. Ahmad, et al.

(2012) and Dharmarathne (2004) also have used mode to rank the CSFs relatively.

For each CSF, a score was calculated by summing up all the ranks. Then the sum could be used as the rank

given by all the respondents to each CSF. The score could be affected with the outliers and adding up ordinal

data might not be the perfect measure. However, median and score both suggest the same priority order for

37

the CSFs which denotes there is no major outliers in collected data. These methods of ranking are used by

Garg and Garg (2014) and T.S. Madurapperuma, et al (2009) in their studies.

Table 5 Ranking of CSFs using measures of central tendency

Further, the ranks of CSFs are analyzed by count and the CSF with most number of preferences in the given

rank is identified as the final rank of the CSF. The CSFs with most number of preferences in each rank can

be prioritized as per table 6 (Appendix C).

Table 6 CSF rank based on frequency

However, the top 7 items would be same as it’s suggested by other measures in above. Top management

support would be the most critical factors as it was highlighted from other measures but other CSFs would be

differently ranked within top 7 of the ranks. The variance of ranking is not dramatic hence it can be

CSF Median Mean Mode Sum

Top Management Support 3 3.55 1 298

Change Management 4 4.73 2 397

Organization Culture 5 5.39 5 453

Project Planning 5 5.65 2 475

Project Management 5 5.58 4 469

Software / ERP package 6 6.01 4 505

Implementation Partner 6 5.93 7 498

Training 7 7.02 9 590

ERP core team composition 7.5 7.11 11 597

Close Monitoring and regular evaluation 9 8.58 10 721

Post Implementation Support 10 9.21 11 774

Previous Exposure 11 9.23 12 775

Ranks CSF

1 Top Management Support

2 Change Management

2 Project Planning

4 Implementation Partner

5 Project Management

5 Software package

7 Organization Culture

8 Training

9 Close Monitoring and regular evaluation

10 Post Implementation Support

11 ERP core team composition

12 Previous Exposure

38

considered the ranking is same as the ranking from median or score. As median, would be the most scientific

and reasonable way to rank the CSFs and there are no major differences in ranks when other methods are

used, median can be used for identifying the significance of CSF (Gunawardena and Wickramasinghe, 2010;

Ahmad, et al., 2012).

Further, the ranks based on the median for each CSF was analyzed based on the different categorical

variables identified. Ranks for CSFs were derived based on the respondents experience in software package.

As per figure 5 it is clear that most of the CSF are ranked irrespective of the Software package they are

exposed to. However, when SAP users think project planning is more important other ERP users think it as

less important factor for the success of the implementation, similarly when other system users think the

software package is more important SAP and Oracle users think it as a less important factor for the success of

the implementation.

Figure 5 Ranks of CSFs based on software used

Figure 6: Ranks of CSFs based on experience in ERP

39

Figure 6 illustrates the analysis of ranks based on the respondents’ knowledge in ERP. This analysis revealed

that individuals more experienced in ERP think project planning and implementation partner are less

influential to project success on the other hand respondents with less experience in implementation think

software package do not greatly influence the project success.

Based on the above categorizations, the differences in ranks were summarized in the below table. A high

variation in the rank is visible in organization culture, project planning and implementation partner with the

categories considered. A similar analysis of the grouped variables were carried out and summarized in table

8. Further, significance of the CSF will be statistically measured with spearmen rank correlation.

Table 7 Summery of ranks - CSF

As it was discussed in the research framework, the CSF identified will be grouped to three main factors as

cultural, tactical and strategic factors to identify the most important element for ERP implementation success.

Further, it is expected that grouping will reduce the variation of the findings.

Table 8 Summary of ranks - grouped CSF

The above table illustrates that cultural factors are most important and tactical factors would be least

important for the success of the implementation while strategic factors would be less prioritized than cultural

CSF

Based on

Median

Based on

Frequency SAP Oracle Other Experienced New Variance

Top Management Support 1 1 1 1 1 1 1 -

Change Management 2 2 2 1 4 2 2 0.69

Organization Culture 3 7 5 3 2 3 3 2.49

Project Planning 3 2 2 5 9 3 3 5.27

Project Management 3 5 4 3 3 3 3 0.53

Software package 6 5 6 5 4 7 7 1.06

Implementation Partner 6 4 6 7 6 3 3 2.29

Training 8 8 8 7 7 8 8 0.20

ERP core team 9 11 8 9 8 8 8 1.06

Close Monitoring 10 9 10 10 11 10 10 0.29

Post Implementation Support 11 10 12 10 10 11 11 0.49

Previous Exposure 12 12 11 12 12 12 12 0.12

CSF

Based on

Median

Based on

Frequency SAP Oracle Other Experienced New Variance

Tactical 3 3 3 3 3 3 3 -

Cultural 1 1 2 1 1 2 1 0.20

Strategic 2 2 1 2 2 1 2 0.20

40

factors but SAP and respondents who are experienced in implementations have identified strategic factors as

most important factors. Before conclusions are made it is essential to verify the relationships statistically.

4.4 Correlation Analysis

4.4.1 Analysis of individual factors

Table 9 demonstrates the correlation between individual CSFs and success of the implementation. Since both

variables are measured as ordinal data, spearman rank correlation is used (T.S. Madurapperuma, et al., 2009;

Bryman & Bell, 2007). As per the correlation calculation below relationships can be identified.

Top management support has a strong and positive correlation with the success of implementation

which is 99% significant statistically.

Post implementation support is negatively and strongly correlated with the success of implementation.

The correlation is 99% significant statistically.

Implementation partner and Project management are also positively correlated with the success of

implementation which is 99% significant statistically. However, the relationship is not strong as top

management support.

Organization culture has a negative and weak correlation with the success of implementation which is

95% significant statistically.

Correlation between other CSFs and the success of implementation are not statistically significant. Therefore,

these factors can be considered as the key success factors. However, the relationships there are no strong

relationships which could be due to indirect relationships. In addition, since 12 CSFs were produced for

ranking and respondents could have got confused in giving priority. Hence it will be useful to see if there are

statistically significant correlations between the variables which could dilute the prominence of strong

correlations with the success.

41

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Tab

le 9

Corr

elat

ions

bet

wee

n t

he

CS

Fs

42

When correlations between individual factors are evaluated below relationships are visible.

Change management has statistically 99% significant positive correlation with organization culture

and training. In addition, it is negatively correlated with software package, implementation partner,

core team and exposure of the organization. Hence change management could be represented through

the said factors which will dilute its correlation with the success of the implementation.

Organization culture is significantly correlated with 7 factors including the success of

implementation. It is negatively correlated with success of the implementation, project planning,

implementation partner, project management, close monitoring and core team composition. As

identified in the above it is positively correlated with change management also. It is important to note

that all the correlations are not strongly related but averagely which could be due to many CSFs are

not independent from each other.

Training has a significant positive correlation with change management and post implementation

support. It is negatively correlated with implementation partner, close monitoring, core team

composition and previous ERP exposure. As per the statistics, training is also significantly correlated

with six other factors which affects its prominence as a CSF.

Another interesting observation is Top management support is only correlated with Success of the

implementation. No other CSF is correlated with Top management support. Therefore, top

management support has the highest significant correlation coefficient with the success of the

implementation.

Correlations between the other factors can be referred from the above table and highlighted once are

the statistically significant relationships.

As it is illustrated above, these CSFs are not independent hence prominent CSFs are less (Ehie and Madsen,

2005; Hedman, 2010). Further, data is analyzed through a regression analysis with the purpose of identifying

the CSFs’ contribution to the success of implementation. Results of the SPSS would be illustrated in table 10.

43

Based on table 10, the given regression model can estimate the success of the implementation with 58.2% (R

square) accuracy. The below ANOVA table 11 shows, that the model predicts the success of implementation

statistically significantly as the P value is less than 0.005.

Table 10 Regression Model summary: All CSFs

Table 11 ANOVA: ALL CSFs

Table 12 Coefficients Table: All CSFs

Above coefficients table suggests, the below regression equation to predict the success of the

implementation.

Implementation Success = -3.421 +0.099 * Training + 0.172 * Top Management support + 0.142 *

Implementation Partner + 0.177 * Project Management + 0.089 * Core team

R R Square

Adjusted R

Square

Std. Error of the

Estimate

1 .763a .582 .518 .503

Model Summary

Model

a. Predictors: (Constant), ERP_exposure, Organization_Culture, Post_Implementation_Support, ERP_package, Core_team,

Close_Monitoring, Top_Management_Support, Implementation_Partner, Change_Management, Training, Project_Management

Sum of Squares df Mean Square F Sig.

Regression 25.341 11 2.304 9.104 .000b

Residual 18.219 72 .253

Total 43.560 83

a. Dependent Variable: Num_success

b. Predictors: (Constant), ERP_exposure, Organization_Culture, Post_Implementation_Support, ERP_package, Core_team, Close_Monitoring,

Top_Management_Support, Implementation_Partner, Change_Management, Training, Project_Management

ANOVAa

Model

1

Standardized

Coefficients

B Std. Error Beta

(Constant) -3.421 1.486 -2.302 .024

Change_Management .042 .028 .178 1.522 .132

Organization_Culture .041 .027 .187 1.530 .130

Training .099 .034 .380 2.910 .005

Top_Management_Support.172 .028 .703 6.094 .000

ERP_package .033 .023 .159 1.466 .147

Implementation_Partner .142 .029 .553 4.841 .000

Post_Implementation_Supp

ort.004 .030 .013 .136 .893

Project_Management .177 .034 .717 5.226 .000

Close_Monitoring .041 .031 .132 1.305 .196

Core_team .089 .028 .423 3.248 .002

ERP_exposure .045 .026 .215 1.767 .081

Coefficientsa

Model

Unstandardized Coefficients

t Sig.

1

a. Dependent Variable: Num_success

44

As per the above findings, it is apparent that above factors are key CSFs and project planning is excluded

when building the formula. However, a limitation could be that use of linear regression model for ordinal

data as the regression model will mostly fit for continuous data. Further, only linear relationships are

identified in the above and there can be non-linear relationships between CSFs and the success of

implementation.

The significant factors were identified initially based on the p-values being less than 0.05 and according to

unstandardized beta values. The most significant factor success factor is top management support followed

by project management, implementation partner, training and core team composition respectively.

4.4.2 Analysis of grouped factors

As explained in the chapter 02, 12 CSFs identified are grouped as cultural, strategic and tactical factors based

on the previous studies. Inter variables’ correlations were analyzed to identify the dependency between the

factors.

Table 13 Correlation table: Grouped CSFs

As per above statistics, all three factors are 99% significantly correlated with the implementation success.

Tactical and cultural factors are negatively correlated while strategic factors possess a strong positive

correlation with the implementation success. Further, a linear regression model was fit to identify the

relationship.

Num_success Tactical Cultural Strategic

Correlation Coefficient 1.000 -.311**

-.298**

.635**

Sig. (2-tailed) .004 .006 .000

N 84 84 84 84

Correlation Coefficient -.311** 1.000 -.368

**-.253

*

Sig. (2-tailed) .004 .001 .020

N 84 84 84 84

Correlation Coefficient -.298**

-.368** 1.000 -.503

**

Sig. (2-tailed) .006 .001 .000

N 84 84 84 84

Correlation Coefficient .635**

-.253*

-.503** 1.000

Sig. (2-tailed) .000 .020 .000

N 84 84 84 84

Correlations

**. Correlation is significant at the 0.01 level (2-tailed).

*. Correlation is significant at the 0.05 level (2-tailed).

Spearman's rho Num_success

Tactical

Cultural

Strategic

45

Table 14 Model Summary: Grouped CSFs

As per above, the regression model can predict only 43.5% of the success. However, the model is statistically

significant based on the ANOVA P value. The coefficients suggest the below regression model to predict the

success of implementations.

Success of implementations = 2.037 – 0.140 * Tactical factors – 0.062 * Cultural Factors + 0.226 * Strategic

Factors

Table 15 Regression model: Grouped CSFs

R R Square

Adjusted R

Square

Std. Error of the

Estimate

1 .659a .435 .414 .555

Model Summary

Model

a. Predictors: (Constant), Strategic, Tactical, Cultural

Sum of Squares df Mean Square F Sig.

Regression 18.937 3 6.312 20.508 .000b

Residual 24.623 80 .308

Total 43.560 83

Standardized

Coefficients

B Std. Error Beta

(Constant) 2.037 1.000 2.037 .045

Tactical -.140 .063 -.283 -2.218 .029

Cultural -.062 .039 -.208 -1.584 .117

Strategic .226 .070 .426 3.237 .002

b. Predictors: (Constant), Strategic, Tactical, Cultural

Coefficientsa

Model

Unstandardized Coefficients

t Sig.

ANOVAa

Model

1

a. Dependent Variable: Num_success

1

a. Dependent Variable: Num_success

46

CHAPTER 5 – DISCUSSION AND CONCLUSIONS

5.1 Findings and Discussion

This paper contributes to literature with various findings on CSFs of ERP implementations. This is one of the

few researches carried out using past literature and survey results for CSFs in ERP implementations in Sri

Lankan companies. Secondly this research provides a regression model to forecast the success of

implementation with detail CSFs. When reviewing past literature, it was apparent that there were many

studies carried out using published data to rank the CSFs but this paper has surveyed individuals involved in

implementations and has develop a model which can be used to assess the readiness of the organization for a

successful ERP implementation. Finally, this paper categorizes the CSFs and identifies which area to be

focused more to improve the success of implementation.

Based on descriptive analysis of the survey data, it can be concluded that Top management support, change

management, project management, organization culture and project planning are the top 5 CSFs. Also it can

be identified there is no major change by the software package used or by the level of experience in ERP.

However, Ahmad, et al.(2012) using indian case studies have idenitfied implementation partner, project

management and selection of the ERP as key CSF but also they have published based on literature Top

management support, training, Business process re-engineering as the key CSFs. Cereolaa, et al.(2012) have

ideintifed strong relationship between top management support and the success of ERP implemations.

Furthermore it can be noticed, orginaization culture is ideintifed as a prominent CSF in the literature

published based on South Asian implemations (Samaratunga, 2003). Similarly, the above CSFs are identified

as critical elements that discirminate success and faliure of ERP by Gunawardena and Wickramasinghe

(2010).

Besides, inference analysis illustrated top management support has a strong correlation with success of the

implementation which re-established the findings of the descritpivte analysis.This is further justified by

emperical study carried out where top management support was idenitfed as a CSF in all the studies

irrespective of the region (table 2). In the context of Sri Lankan implementations also top management

support is identified as a CSF by T.S. Madurapperuma, et al., (2009) ,Gunawardena and Wickramasinghe

(2010) and Perera and Costa (2008) in their studies. Ehie and Madsen (2005) and Grunert (1992) have

established that the implementation need to be driven by top to bottom which is key to success.

47

In addition, implementation partner and project management are the other factors which are statistically

correlated with the project success. Project management is another CSF which is universally accpeted as one

of the key drivers of project success (Table 2). However, implemntation partner is not been highlighted

commonly as a CSF but Ahmad, et al. (2012), Garg and Agarwal (2014) and Basoglu , et al. (2007) have

identifed the same. Orgnaization culture shows a negative weaker correlation with success of the

implemenation. Nevertheless, Organization culture is identified as a CSF by Ahmad, et al. (2012)

Gunawardena and Wickramasinghe (2010). This correlations may not have been highlighted statistically in

this reserch manily due to organization culutre, which presents a siginificant correlations with six other

CSFs as well. This indicates that culture is not directly impacting the success of the implemantion but it

contributes to the success through other CSFs. Simillar thought was established by Samaratunga (2003) as

well.

Another finding was that post implementation support has a negative strong correlation with the success of

the implementation. This has not been a popular CSF as a signifcant factor contributing to success. This

correlation could be indicating siginificance of ability to maintian the system. It is said that implementation is

easier when compared to maintenance hence post implementation support will be critical to sustain the

success and reap the benfits of the implemenation (Naderinejad, et al., 2014; Hedman, 2010). Respectively, it

can be interpreted as post implementation support will be critical when the project is not securing the benefits

expected.

When the CSFs are grouped as Cultural, Tactical and Strategic factors, it is revealed that cultural and

strategic factors are ranked over tactical factors through descriptive analysis. That can be interpreted as for

the success of an ERP implementation culture of the organization and strategic preparation and direction

would be more influential than the actual operational activities during the implementation. Statistically

strategic factors indicates a positive strong correlation with success of the implementation. The next best

correlation is shown with tactical factors. However all three factors are correlated with each other and not

mutually exclusive (Akkermans & Helden, 2002). Even though Cultural factors have less strong correlation

with the success, it is strongly correlated with strategic factors and tactical factors. Therefore, cultural factors

operate as the base of tactical and strategic factors in driving the project success.

48

Further, this research has derived two statistically significant regression models. One model was formulated

with the individual main CSFs and it will predict the success of the implementation 58% accurately. The

second model is derived based on the grouped CSFs and the model will predict the success 43% accurately.

In addition, the research findings illustrate the extent of influence on each factor for the success of the

implementation. The constant value and the R values of the regression analysis denote that there are many

other factors which are not covered in the analysis but impacts the success of the implementation which

provide direction for future research (Alvesson & Deetz, 2000).

5.2 Theoretical Implications

This research encapsulate literature on CSFs and identified common factors are investigated further with a

survey. Besides, the findings reveal that success of ERP implementation is not merely due to few factors but

it is based on integrated many factors. Hence it reconfirms the previous academic findings and establishes the

fact that a precise and common process for successful ERP implementation cannot be clearly identified.

5.3 Practical Implications

As this research links previous academic findings and experience from current stakeholders of ERP

implementations, the findings and the content of the study will be beneficial for people who are looking

forward to embark on ERP implementations in Sri Lanka. In addition, the findings will present an

understanding on complexity of ERP and key CSFs. Most importantly the research highlights the fact that for

the success of implementations in Sri Lanka strategic and cultural factors are more important than tactical

factors.

5.4 Limitations

There could be limitations which may constraint the generalizability of the findings of this research. One of

the limitation would be this research is based on identified common CSFs. The impact of other factors which

are not identified is not analyzed in this research. Thereby rankings could be misrepresented. However, it

provide direction for future research. The second limitation is since the study is based in Sri Lanka findings

cannot be generalized universally, however the findings could be useful as a guideline. Third limitation is

lack in representation of all stakeholders in survey results could present bias results. Hence the results may

not cover the users or management perception. Another limitation of this research would be the

interrelationships of the factors identified and few main factors cannot be identified. Same would have

49

affected to response received since the participants of the survey might not have interpreted the CSFs in the

same manner. Moreover, the grouping of the CSFs identified in order to summarize and simplify, may be

misleading if the respondents have not identified it in the same way. However, the research provide a sound

base for future research and guidance to achieve success with ERP implementation.

5.4.1 Directions for future research

This research can be extended in many ways. This provide the base for CSFs of ERP implementations and

the number of factors evaluated could be increased hence a better regression model can be derived. Further,

this can be expanded to many other industries and other south Asian countries to identify any common

factors in the region. It will be important to collect the responses via interview then issues in interpreting the

CSFs can be avoided. Also, it will ensure the survey results are collected from all stakeholders which will

cover all perceptions of ERP implementations. Another suggestion would be to consider the correlations

between the factors as well which will enhance the ability to conclude the main CSFs.

5.5 Reflections

One of the main objective of the research was to contribute a synopsis of CSFs of ERP implementations to

the industry which will be useful for the organizations that are to implement ERPs. Further, the research

presents a background of ERP including use of ERP which will help to promote ERPs among Sri Lankan

companies. This is expected to reduce the fear of adopting new technology and to highlight the benefits of

the adopting the same.

As estimated this study could not be completed within the stipulated six months. However, researcher could

reach 150 participants even though the responses were not received from everyone. In future researcher, will

focus more on time management and work prioritization. Since the researcher is involved in ERP

implementations, the findings of this research will be an added advantage for career progression and delivery

of the responsibilities.

Further, the research methods enhanced the ability in analyzing a problem and finding solutions through

research. The involvement in carrying out a study in this nature will certainly enhance my decision-making

power in any organization I wish to work in the future. Additionally, the skills gained in the process of

completing the dissertation will assist in identifying the root cause of the problems and finding solutions in a

scientific way.

50

Moreover, the skills gained while studying as a distant learning student will be beneficial in working

remotely which is currently gaining popularity in the commercial sector. Distant learning improved self-

discipline and ability to work with minimum supervision of the researcher. In addition, this program enabled

the researcher with the skills to search and explore required information and references on any subject matter.

Despite dissertation being challenging, the experience gained cannot be expressed, skills will not be limited

to the above. Studying in University of Leicester community was enjoyable with supportive mentors along

with multicultural student network, which brought life long memories and learnings which will be cherished

in the future.

51

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56

APPENDIX

Appendix A – Sample of companies

Company Name Software Package Main Industry

Hemas Holdings PLC SAP Diversified conglomerate

Brown and Company PLC Microsoft Dynamix Manufacturing

Good Hope Holdings Oracle Manufacturing

MAS Holdings Pvt Ltd SAP Apparel Manufacturing

Brandix Lanka Limited Movex Apparel Manufacturing

John Keells Holdings PLC SAP Diversified conglomerate

Ceylon Tea Service PLC Oracle Manufacturing

Loadstar (Pvt) Ltd SAP Manufacturing

Royal Ceramics Lanka Plc Oracle Manufacturing

Heyleys Group SAP Diversified conglomerate

57

Appendix B- Frequency Table of Ranks for CSFs

Ranks

Change

Management

Organiz

ation

Culture Training

Project

Planning

Top

Management

Support

Software

package

Implementa

tion Partner

Post

Implementation

Support

Project

Management

Close

Monitoring

and regular

ERP core

team

compositio

Previous

Exposure of

the

1 11 9 0 4 29 11 3 0 6 0 7 4

2 15 12 2 15 9 6 6 2 8 2 6 1

3 14 7 11 7 13 3 12 2 8 2 2 3

4 10 7 7 11 7 13 8 0 13 0 4 3

5 1 15 6 9 6 5 11 1 12 5 9 5

6 8 9 10 6 3 12 8 5 5 7 8 3

7 9 3 11 6 3 8 12 5 8 8 7 4

8 1 6 7 9 6 3 5 13 6 10 11 7

9 6 2 11 3 4 5 9 14 10 13 3 4

10 6 4 8 5 2 6 5 12 2 22 8 4

11 3 5 9 4 1 5 3 18 5 9 12 10

12 0 5 2 5 1 7 2 12 1 6 7 36

58

Appendix C – Questionnaire

59

60

Appendix D – Data Collected

Level of  your involvement in the ImplementationERP software which you have mostly engaged inType of the company where the implementation would be easier and successfulType of the industry where the implementation would be easier and successfulOther (please specify)Knowledge in ERPMost of the implementations you experienced was  Other (please specify)Change ManagementOrganization CultureTraining Project PlanningTop Management SupportSoftware / ERP packageImplementation PartnerPost Implementation SupportProject ManagementClose Monitoring and regular evaluationERP core team compositionPrevious Exposure of the organization in ERP (Capability Maturity model )

User SAP First system experience and processes are set upFMCG Have used ERP beforeAveragely successful 3 4 5 12 2 1 6 11 7 10 8 9

User SAP When it is the first system experience and no processes are set upIndustry is not RelevantNew to ERPAveragely successful 3 2 6 5 1 4 7 8 9 10 11 12

Core Team MemberOther Upgrade of the existing systemTrading Have used ERP beforeSuccessful 10 8 9 7 3 1 2 11 4 5 6 12

Observer SAP First system experience and processes are set upManufacturing Certified ConsultantFailed 6 7 11 12 8 2 9 3 10 5 1 4

User SAP Upgrade of the existing systemTrading Have used ERP beforeAveragely successful 10 2 9 3 1 4 5 11 8 12 7 6

Observer Oracle Upgrade of the existing systemIndustry is not RelevantHave used ERP beforeAveragely successful 3 2 5 6 1 7 8 9 4 11 10 12

Functional ConsultantSAP When it is the first system experience and no processes are set upIndustry is not RelevantExperienced in Implementations beforeFailed 2 5 9 3 8 7 6 11 4 10 1 12

ERP VendorOther When it is the first system experience and no processes are set upIndustry is not RelevantExperienced in Implementations beforeAveragely successful 6 10 8 2 3 9 4 11 5 7 1 12

Functional ConsultantOracle First system experience and processes are set upIndustry is not RelevantCertified ConsultantFailed 6 11 7 2 4 8 5 10 1 3 12 9

ERP VendorSAP First system experience and processes are set upManufacturing Have used ERP beforeAveragely successful 3 2 4 9 1 5 7 8 6 10 11 12

Implementation PartnerOracle When it is the first system experience and no processes are set upFMCG Certified ConsultantAveragely successful 1 2 7 12 3 4 6 9 5 8 10 11

Functional ConsultantSAP Upgrade of the existing systemIndustry is not RelevantExperienced in Implementations beforeSuccessful 2 3 5 8 1 12 6 10 7 9 4 11

Functional ConsultantOracle Type of the company is not relevantTrading Certified ConsultantSuccessful 4 10 8 2 1 9 5 12 3 7 6 11

ERP VendorOracle Type of the company is not relevantIndustry is not RelevantExperienced in Implementations beforeSuccessful 4 2 9 10 1 6 3 11 5 7 8 12

Functional ConsultantInfor Upgrade of the existing systemIndustry is not RelevantCertified ConsultantFailed 11 8 9 2 5 4 3 10 6 7 12 1

Functional ConsultantInfor When it is the first system experience and no processes are set upManufacturing Certified ConsultantAveragely successful 3 9 7 10 4 1 2 6 12 8 5 11

Core Team MemberInfor When it is the first system experience and no processes are set upTrading Certified ConsultantFailed 9 12 3 1 5 6 7 10 2 11 8 4

Functional ConsultantInfor When it is the first system experience and no processes are set upTrading Certified ConsultantAveragely successful 2 8 7 1 6 11 3 9 4 10 5 12

User Microsoft DynamicsFirst system experience and processes are set upIndustry is not RelevantHave used ERP beforeAveragely successful 1 7 6 2 3 4 5 10 9 11 12 8

Observer Infor First system experience and processes are set upManufacturing Have used ERP beforeFailed 12 3 10 6 9 4 5 11 7 8 2 1

User Other When it is the first system experience and no processes are set upManufacturing New to ERPSuccessful 9 1 6 10 2 4 3 11 7 8 12 5

Functional ConsultantInfor Type of the company is not relevantManufacturing Experienced in Implementations beforeSuccessful 2 1 10 8 3 11 12 6 9 5 7 4

Functional ConsultantSAP First system experience and processes are set upManufacturing Experienced in Implementations beforeAveragely successful 10 12 7 6 3 1 2 11 8 9 4 5

Functional ConsultantSAP First system experience and processes are set upIndustry is not RelevantCertified ConsultantAveragely successful 4 5 6 2 7 8 1 11 3 10 9 12

Functional ConsultantSAP First system experience and processes are set upIndustry is not RelevantCertified ConsultantAveragely successful 7 6 9 1 4 11 5 12 2 3 8 10

Functional ConsultantSAP First system experience and processes are set upIndustry is not RelevantExperienced in Implementations beforeAveragely successful 2 6 8 12 9 10 1 4 11 7 5 3

Functional ConsultantSAP Type of the company is not relevantIndustry is not RelevantExperienced in Implementations beforeAveragely successful 8 5 9 1 3 12 4 11 2 6 7 10

Core Team MemberSAP When it is the first system experience and no processes are set upIndustry is not RelevantExperienced in Implementations beforeAveragely successful 11 5 6 4 7 3 9 10 2 8 1 12

Functional ConsultantSAP Type of the company is not relevantManufacturing Have used ERP beforeSuccessful 2 5 3 4 1 6 7 8 9 10 11 12

Implementation PartnerOther First system experience and processes are set upIndustry is not RelevantExperienced in Implementations beforeFailed 1 2 3 4 5 6 7 8 9 10 11 12

User SAP First system experience and processes are set upManufacturing New to ERPSuccessful 1 4 3 5 2 10 9 8 7 11 6 12

Functional ConsultantOracle Upgrade of the existing systemIndustry is not RelevantCertified ConsultantSuccessful 1 4 3 5 2 9 10 11 8 7 6 12

User SAP When it is the first system experience and no processes are set upIndustry is not RelevantHave used ERP beforeAveragely successful 4 12 6 5 9 1 8 7 3 10 2 11

User Infor When it is the first system experience and no processes are set upIndustry is not RelevantNew to ERPSuccessful 6 5 10 8 3 1 4 11 7 9 2 12

Implementation PartnerInfor When it is the first system experience and no processes are set upIndustry is not RelevantNew to ERPSuccessful 7 2 12 8 1 6 9 11 5 10 4 3

Implementation PartnerInfor First system experience and processes are set upIndustry is not RelevantHave used ERP beforeSuccessful 3 1 7 9 2 4 6 10 8 12 11 5

Observer SAP Type of the company is not relevantConstruction Experienced in Implementations beforeAveragely successful 7 6 11 8 4 2 3 12 9 10 5 1

Core Team MemberOracle Type of the company is not relevantIndustry is not RelevantExperienced in Implementations beforeFailed 6 5 7 8 9 4 10 2 11 12 1 3

Core Team MemberOracle Upgrade of the existing systemTrading Experienced in Implementations beforeAveragely successful 10 12 8 4 3 1 2 9 5 7 6 11

User SAP First system experience and processes are set upManufacturing Have used ERP beforeSuccessful 4 7 5 2 3 9 10 11 1 12 6 8

Core Team MemberOracle Upgrade of the existing systemFMCG Experienced in Implementations beforeAveragely successful 3 1 2 4 5 6 7 8 9 10 11 12

Implementation PartnerMicrosoft DynamicsType of the company is not relevantIndustry is not RelevantCertified ConsultantSuccessful 4 2 3 7 1 6 5 9 8 10 11 12

Implementation PartnerSAP Implementation of a new package over a legacy systemManufacturing Certified ConsultantSuccessful 7 9 11 2 1 5 4 10 3 6 8 12

Implementation PartnerOracle Upgrade of the existing systemTrading Experienced in Implementations beforeSuccessful 7 8 9 11 1 2 3 10 5 6 4 12

Implementation PartnerSAP Type of the company is not relevantIndustry is not RelevantExperienced in Implementations beforeSuccessful 2 6 10 7 1 4 3 11 8 9 5 12

Functional ConsultantOracle Implementation of a new package over a legacy systemManufacturing Experienced in Implementations beforeAveragely successful 4 5 7 6 8 1 3 10 2 9 11 12

ERP VendorIFS Type of the company is not relevantOther (please specify)It all depends on the readiness of the organization, and it's people.Certified ConsultantSuccessful 2 3 10 8 1 4 6 12 7 9 5 11

Functional ConsultantSAP When it is the first system experience and no processes are set upIndustry is not RelevantExperienced in Implementations beforeAveragely successful 6 10 11 5 3 1 2 12 4 8 9 7

Core Team MemberSAP Type of the company is not relevantIndustry is not RelevantCertified ConsultantSuccessful 2 3 7 6 1 5 11 12 4 9 10 8

Core Team MemberMicrosoft DynamicsFirst system experience and processes are set upTrading Experienced in Implementations beforeSuccessful 1 3 4 5 8 6 9 7 2 10 11 12

Observer Infor First system experience and processes are set upFMCG Experienced in Implementations beforeSuccessful 9 6 8 2 1 7 4 10 3 11 5 12

Core Team MemberSAP Type of the company is not relevantIndustry is not RelevantExperienced in Implementations beforeSuccessful 7 6 11 8 1 5 4 9 3 10 2 12

Core Team MemberSAP Upgrade of the existing systemFMCG Have used ERP beforeAveragely successful 2 1 10 3 4 7 5 12 6 11 8 9

Core Team MemberSAP Upgrade of the existing systemFMCG Experienced in Implementations beforeSuccessful 7 5 9 4 1 10 2 6 11 12 3 8

Functional ConsultantIFS When it is the first system experience and no processes are set upIndustry is not RelevantExperienced in Implementations beforeSuccessful 3 2 5 11 1 9 7 6 4 10 12 8

Core Team MemberIFS First system experience and processes are set upIndustry is not RelevantExperienced in Implementations beforeAveragely successful 11 1 6 7 2 3 12 8 4 10 9 5

Core Team MemberIFS Type of the company is not relevantIndustry is not RelevantExperienced in Implementations beforeSuccessful 10 11 6 4 9 2 3 12 1 7 5 8

Functional ConsultantSAP Type of the company is not relevantIndustry is not RelevantExperienced in Implementations beforeFailed 3 5 4 2 8 7 6 11 1 9 10 12

Core Team MemberSAP Type of the company is not relevantIndustry is not RelevantExperienced in Implementations beforeSuccessful 2 1 3 4 5 6 7 8 9 10 11 12

Implementation PartnerSAP First system experience and processes are set upIndustry is not RelevantExperienced in Implementations beforeSuccessful 9 10 11 2 1 4 5 12 3 8 6 7

Core Team MemberOracle Upgrade of the existing systemTrading Experienced in Implementations beforeSuccessful 7 12 3 10 1 2 4 6 5 9 8 11

Core Team MemberSAP Upgrade of the existing systemTrading Experienced in Implementations beforeSuccessful 2 11 8 5 1 3 4 10 6 9 7 12

Core Team MemberOracle First system experience and processes are set upIndustry is not RelevantNew to ERPSuccessful 2 11 4 7 1 8 3 9 5 6 10 12

Observer Oracle Upgrade of the existing systemIndustry is not RelevantExperienced in Implementations beforeSuccessful 2 4 6 3 1 10 7 9 5 11 8 12

User SAP When it is the first system experience and no processes are set upIndustry is not RelevantNew to ERPAveragely successful 1 11 3 7 2 12 5 9 4 8 10 6

User Oracle First system experience and processes are set upTrading Have used ERP beforeFailed 2 1 3 5 6 7 8 9 4 11 12 10

Core Team MemberSAP Upgrade of the existing systemIndustry is not RelevantHave used ERP beforeAveragely successful 10 1 11 3 2 5 9 12 4 6 7 8

Functional ConsultantSAP Upgrade of the existing systemTrading Experienced in Implementations beforeAveragely successful 4 5 10 2 1 12 9 11 3 8 7 6

Functional ConsultantSAP Type of the company is not relevantIndustry is not RelevantExperienced in Implementations beforeSuccessful 1 3 4 6 8 7 9 11 2 10 5 12

Functional ConsultantSAP Type of the company is not relevantIndustry is not RelevantExperienced in Implementations beforeAveragely successful 9 8 6 4 3 11 10 7 5 2 1 12

Functional ConsultantSAP When it is the first system experience and no processes are set upIndustry is not RelevantExperienced in Implementations beforeSuccessful 6 5 7 3 1 10 11 12 4 8 2 9

Functional ConsultantOracle When it is the first system experience and no processes are set upIndustry is not RelevantNew to ERPAveragely successful 4 5 10 2 1 12 7 8 6 9 3 11

Functional ConsultantOracle Upgrade of the existing systemIndustry is not RelevantExperienced in Implementations beforeOther (please specify)Failed initially then successful 5 6 7 8 4 12 3 9 11 10 2 1

Implementation PartnerOracle Upgrade of the existing systemManufacturing New to ERPOther (please specify)sucess is subjective 4 3 11 2 1 6 7 8 5 9 10 12

Functional ConsultantOracle First system experience and processes are set upIndustry is not RelevantCertified ConsultantAveragely successful 3 8 4 5 6 12 9 7 1 2 10 11

User Oracle Type of the company is not relevantOther (please specify)In my opinion no implementation is easy. Proper management of the core 9 project management areas will make it a successful implementation.Experienced in Implementations beforeFailed 6 5 4 10 3 1 8 7 11 9 12 2

Functional ConsultantOracle Type of the company is not relevantOther (please specify)Financial ServicesExperienced in Implementations beforeSuccessful 3 2 5 4 1 6 7 8 9 10 11 12

Implementation PartnerOracle Implementation of a new package over a legacy systemIndustry is not RelevantNew to ERPAveragely successful 3 4 9 11 7 10 8 2 1 12 6 5

Functional ConsultantOracle When it is the first system experience and no processes are set upIndustry is not RelevantNew to ERPSuccessful 1 6 9 3 2 11 10 12 4 5 8 7

Core Team MemberOracle Implementation of a new package over a legacy systemOther (please specify)T Have used ERP beforeSuccessful 1 2 12 11 7 4 3 9 5 6 8 10

Implementation PartnerOracle First system experience and processes are set upIndustry is not RelevantHave used ERP beforeAveragely successful 3 5 11 12 4 2 1 9 7 6 8 10

ERP VendorOther First system experience and processes are set upTrading Experienced in Implementations beforeFailed 3 6 8 4 7 1 11 9 2 5 10 12

Core Team MemberIFS When it is the first system experience and no processes are set upIndustry is not RelevantExperienced in Implementations beforeAveragely successful 7 4 2 9 8 6 5 3 10 11 1 12

Core Team MemberSAP Type of the company is not relevantTrading Certified ConsultantSuccessful 1 4 3 2 5 7 6 8 9 10 11 12

61

Appendix F: Research Proposal

PROGRAMME TITLE

Master of Business Administration – Distance Learning

SPECIALISM

General

ETHICAL APPROVAL REFERENCE NUMBER

cbh8-78cf5

MODULE TITLE

Research Methods

ASSIGNMENT

Research Proposal

DISSERTATION SUPEVISOR

Dr. Colin Price

STUDENT NUMBER

139044216

WORD COUNT

1840

62

TITLLE

Key factors of success or failure in ERP implementations in Sri Lankan companies

63

CONTENTS

1.0 INTRODUCTION…………………………………………………………………………….64

1.1 Research Question ........................................................................................................... 64

1.2 Significance of the Research ........................................................................................... 64

2.0 RELATION TO PREVIOUS RESEARCH…………………………………………………..65

3.0 PROPOSED METHODS……………………………………………………………………..67

4.0 REFLECTIONS………………………………………………………………………………68

5.0 TIMETABLE………………………………………………………………………………..70

6.0 REFERENCES……………………………………………………………………………...71

64

1.0 INTRODUCTION

1.1 Research Question

The main focus of the research will be on steering Enterprise Resource Planning (ERP) implementations successfully.

The research would be structured through finding solutions to three main questions. Initially, common steps of an

ERP implementation need to be identified. This could be generalized irrespective of the company specific factors such

as industry and size (Wickramasinghe et all, 2010). However there could be factors specific to the organization which

needs to be considered provided those factors have a considerable impact on the success or failure. Once the

common process is established then the significance of each step for a successful implementation will be evaluated

which facilitate to establish the critical success factors of an implementation.

1.2 Significance of the Research

The business environment has become multifaceted with the increasing competition and has got complicated with

new development in technology (Cereolaa et all, 2012). Hence managing a business has become exigent and all the

entities are searching for access to complete and accurate information to make the right and quick decision (Lorge,

2014). Therefore the demand for ERP packages has increased among Sri Lankan companies to ensure the availability

of accurate information. However the process of implementing an ERP is complicated and the desired benefits may

not be achieved (Krotov et all, 2011). Identification of implementation steps and factors to improve the success of

the implementation are in demand.

65

2.0 RELATION TO PREVIOUS RESEARCH

It is important to refer the previous studies on the related topics to set the base for a comprehensive research. The

other objectives of referring the previous research journals were to identify whether there are any other researches

carried out on the same subject, to learn from their limitations and recommendations, to identify if there are any

experts on the subject matter who can be consulted and to determine the methodology to be used in the research

(Bryman, Bell, 2007). A complete study of the related researches will provide a solid background knowledge required

and direction for the new research. The key researches referred for the proposal and the value added by them are

illustrated below.

Wickramasinghe and Gunawardena (2010) have carried out a research on Critical elements that discriminate

between successful and unsuccessful ERP implementations in Sri Lanka. They have concluded that ERP

implementation project performance significantly differs between successful and unsuccessful

implementations. training and education, user involvement, managing user expectations, interdepartmental

cooperation, ERP teamwork and team composition, software development, testing and troubleshooting,

project management, project champion, Business Process Reengineering and customization, change

management program Organizational culture and effective communication are identified as the key factors

determines the success or failure.

The case study on the ERP implementation of Natural Springs carried out by Krotov, Boukhonine and Ives

(2011) illustrated main reasons for the failure of an implementation. In addition, the case study on ERP

implementation in a Fortis hospital (2012) and ERP implementation in retail sector (Garg et al, 2012) were

useful to identify the common steps in implementations. This background knowledge will be useful in

preparing the questionnaire to investigate on the implementation process in local companies.

Wickramasinghe and Gunawardena (2010) have researched the people centered factors and concluded that

‘project team competence’, ‘rewards’ and ‘communication and change’ influence significantly for the

success of the ERP implementation. This guides and set the base in identifying critical success factors of an

ERP implementation. In addition, Lin and Ma (2014) have established the dynamic capabilities needed in

ERP activity. They also claimed that the implementation process is a dynamic phenomenon with continuing

variation. Further, Ram et all (2015) have illustrated the readiness required from the organization for an ERP

implementation. It illustrates that the success of the implementation depends on the post implementation

success which would depend on how well the system is adopted.

Moreover, related research journals on ERP systems were referred to understand the background of the

research problem. Wickramasinghe and Karunasekara (2010) have identified there is no significant

perceptual difference of managerial and operational end users towards the ERP but problem-solving support,

authority, decision rights and overall performance improvement have been identified as important post-

66

implementation outcomes of ERP usage that discriminate between management and operational end-users.

Perera and Costa (2008) have developed an Analytic Hierarchy Process (AHP) model for ranking the ERP

software to be used in selecting an ERP as it is one of the foundation elements in the implementation process.

67

3.0 PROPOSED METHODS

The research will be planned with inductive analysis. The key conclusions on the common steps of the

implementation process and key success or failure factors will be identified only after analyzing the data (Bryman,

Bell, 2007). There will not be a pre derived hypothesis which will be tested for validity. According to the research

questions data gathered would be more qualitative than quantitative hence interpretative techniques have to be

used for deriving the relationships. Categorical measures will be developed to measure the qualitative data. Since the

researcher is also involved in ERP implementations to maintain the independency of the responses collected, more

questionnaires will be used than the interviews. Otherwise researcher’s opinion will bias the participants’ response.

Further to reduce the subjectivity of the data, it is expected to collect at least five observations from the same

company.

The research will consider Sri Lankan companies those have implemented an ERP package during last 10 years as the

population. The research finding will be limited to Sri Lankan companies and only within the last 10 years is

considered due to the rapid changes in ERP packages, Information and technology and business world (Lin and Ma,

2014). Also the scope of this research will be limited only to the implementation and not to the selection, purchase or

post implementation phases.

A sample of 25-30 companies will be selected across different industries and the Stratified random sampling method

will be used to provide the similar weight for each industry otherwise the findings could be biased towards an

industry. The type of the software which is implemented can be eliminated because Wickramasinghe and

Gunawardena (2010) have identified that number of modules and the software do not impact the success of the

implementation.

Next, a criterion would be developed to determine whether the implementation is successful or not. The criterion

would be developed based on the previous researches. The data will be collected through questionnaires from

Project team members, Chief Information officers, Chief executive officers and project managers of the above

population (Wickramasinghe, Gunawardena, 2010). Responses from officers in different levels will be considered

from the same company, as it will provide a holistic view on the success or the failure of the project.

The main implementation steps will be identified through previous studies but through the survey common

steps will be identified and then the relationship of each for the success will be calculated. Primary research

will be carried out by gathering categorical data and also the structured answers. A semi-structured interview

style will be used to gather data from the senior management to assess the implementation steps and also to

get the limitations and recommendations for a next implementation (Bryman, Bell, 2007). Thus each

participant will be able to provide their view on the implementation, even though the feedback would be

subjective.

The critical success factors will be identified after analyzing the relationships between the implementation steps and

the success of the implementation. The factors which would have strong relationship with the success of the

implementation will be identified as key success factors. Similarly the key factors for failure will also be identified. The

data would be collected through categorical variables to enable use of descriptive statistics.

68

4.0 REFLECTIONS

One of the key objectives of the research is to gain better exposure in ERP implementation process and to

learn managing implementations successfully. Since the researcher is already leading an ERP implementation

this will enable him to practice what is revealed through the study. Further, this research would help to

expand researcher’s knowledge and skills for time management, prioritization of work and managing

complex projects.

Potential practical and empirical obstacles of the research would be mainly to identify the companies which

have implemented ERP packages recently. However the researcher will identify the companies through the

industry contacts of the ERP implementers and software vendors. The next would be getting in contact with

the key individuals of the project and the company. This will be managed through the formal approach,

through the industry contacts and also recommendations. Since the researcher is already engaged in an ERP

implementation, finding industry contacts would not be difficult. Another obstacle would be subjectivity of

the responses received. Since most of the data would be categorical, the response would be greatly dependent

on the participant. To mitigate the impact of the subjectivity, few employees at the same level could be

interviewed. However it will increase the number of participants which will impact the time required for the

project. Allocation of the time required for the research would be another potential practical problem as the

researcher is full time employed and engaged in an implementation project which is about to go-live.

Therefore effective time management will be essential to achieve all the tasks simultaneously.

As the most of the data would be categorical the data can be only analyzed using dummy variables and will

not be able to derive the relationships as quantitative data. Further the data would be subjective hence the

findings could be biased and might not be able to derive any relationship too. Another theoretical limitation

would be the fact that data is being collected across different industries while the industry itself could be one

main factor affecting the success of the implementation due to the complexity specific to the industry. Hence

the findings might not be comparable. To overcome this limitation, stratified sampling method will be used

in selecting the sample. Another limitation could be the use of past researches in developing the criterion to

determine the success of the implementation which could be misleading as the business environment and

technology are rapidly changing (Lin and Ma, 2014).

Further the expectations of the system would have changed. Therefore defining the criterion to determine the

success or failure of a project has to be done carefully. There would not be any ethical issues on this research

as long as the information is accessed with sufficient authorization. All information accessed will be with

informed consent and will maintain the confidentiality. Further the use of the data will be only limited to

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academic purpose. In addition, the data gathering through industry contacts should not influence the

professional relationship between the researcher and the contacts that will assist in collecting data.

5.0 TIMETABLE

The time plan for the research completion would be as per the below Gantt chart. The research has to be paused

from February to April 2015 as there are another two assignment submissions during the same period. The project

milestones are marked with stars. In addition, the critical path of the project is marked in amber.

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Fig

ure

01

: P

roje

ct G

antt

char

t

71

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