ERP Implementation-Critical Success Factors and Management Influence

ERP IMPLEMENTATION CRITICALSUCCESS FACTORS 1
Literature Review: ERP Implementation Critical Success Factors
Matthew D. Pirie
McMaster University

Literature Review: ERP Implementation Critical Success Factors
Critical success factors (CSFs) in ERP implementations have been well researched. The
academic literature contains many studies confirming the primacy of certain factors over others,
which are sometimes subtly contradicted by further studies which reorder the most important
factors. The main factors do not change much across the analyses, and later papers' authors
reference earlier works as the basis for the authors' own research. This body of work has
converged on broad requirements or predispositions that, when possessed in sufficient quantity
and quality, seem to increase the chances of an ERP implementation that meets organizational
goals for functionality, schedule, budgetary constraints, and user acceptance. Adequate technical
skills, possessed both by internal stakeholders and users, and external consultants, are a
prerequisite for success in any ERP implementation. Adequate vendor support before, during,
and after the implementation is vital. The common elements in the literature, however, seem to
indicate a more basic, vital requirement: culture.
The culture of an organization must be aligned to allow change. This tolerance towards,
or preferably excitement for, change is a CSF that is highly correlated with successful
implementations. The propensity of an organization's members to work well in teams and
support each other laterally across the organizational chart, but also vertically up and down the
chart is indicative of an organization with a higher likelihood of implementation success than a
more silo-type organization. Top management is a driver of organizational culture and the
unwavering support and engagement of top management before, during, and after
implementation activities is generally the top, or one of the top, CSFs in the academic literature.
Considering the costs involved in ERP implementations, and the potential risks of partial
or full implementation failure, it is incumbent upon top management members to be in front of

their organizations regularly, displaying their full support and commitment towards the new
system. In this way, organizational members will be made to understand that the successful
implementation and adoption of an ERP system is a top company priority.
Strong, consistent and visible top management support is the vital component in
successful ERP implementations.
Critical success factors in the literature
Academics in the business world have studied critical success factors in ERP
implementations for years. Findings in papers tend to agree with earlier and parallel work, and
later papers build upon earlier efforts.
Early published critical success factors include the use of a project champion, a project
management approach to management of the implementation, a coherent business plan and
vision linking ERP to the organizational plans, unwavering support from top management, strong
commitment to communication, and a culture committed to change and an effective change
management program. Further literature review reveals the requirement for a strong and skilled
ERP implementation team, effective Business Process Reengineering (BPR), as little
customization of the system as possible, and efficient software development and testing.
Continuous monitoring of progress and appraisal of performance are also important. Other
factors include full engagement of employees during the process, nurturing of trust of affected
staff, and adequate system training (Loh & Koh, 2004).
A survey carried out in the early 2000s indicated that CIOs from Fortune 1000 companies
that had been through an ERP implementation project believed the top five CSFs, in order, were
top management support, existence of a strong project champion, ERP teamwork and

composition, use of project management techniques, and a change management program and a
culture aligned for change management (Fui-Hoon Nah, Zuckweiler, & Lee-Shang Lau, 2003).
Later research has demonstrated that training and education for system users is highly
correlated with successful implementations (Ram, Corkindale, & Wu, 2013). Indeed, later
research has revealed that CSFs can be bundled into higher-level factors, focusing on Technology,
Organization, and Environment. Top management commitment can be seen to affect many of the
factors, either directly with their involvement in actual projects, or indirectly, such as in their
budgeting, team setting, planning, and organizational change management (Schniederjans &
Yadav, 2013).
In order to understand how success in implementations is achieved, an understanding of
failure is important. Factors that are highly correlated with failure of ERP implementations
include a lack of user involvement in the implementation of projects, a lack of training, and
insufficient communication of the project directives and goals by management (Beheshti,
Blaylock, Henderson, & Lollar, 2014). Implementation failure can be defined by several metrics,
but a consensus view has it that failure represents time and cost overruns, loss of data
confidentiality, and server downtime or failure. Overall, a failure can be thought of as wasteful in
terms of capital, time, and competitive advantage, which may lead to bankruptcy (Schniederjans
& Yadav, 2013). The number of organizations that fail to meet their ERP implementation
objectives in one or more of those categories range from 55-75% (Beheshti et al., 2014).
Employee Focus
Human Behaviour
A short look into the human propensity to follow our peer groups and perceived or actual
leaders will demonstrate the requirement for a strongly user-centric organization as a base

requirement for successful ERP implementations. As negative organizational feelings towards
ERP systems are associated with individual reticence to accept the implementation (Kwak, Park,
Chung, & Ghosh, 2012), the creation of effective implementation teams is good insurance
against failure (Nah & Delgado, 2006).
Herd behaviour is a significant driver of technology adoption. People are likely to imitate
observed adopters. Potential users' initial feelings about adoption of a technology can be
sufficiently adjusted by observing others that have adopted the technology, such that, even
though initial biases towards a technology may be negative, these will be integrated with others'
perceived opinions when one's own final opinion is generated. As people will often disregard
their own beliefs for the observed behaviour of others, this presents both an opportunity and
problem for ERP implementation success (Sun, 2013).
If an implementation team can create a core group of early adopters that can be expected
to sell the benefits to the organization at large, cultural barriers to success can be lowered.
However, large scale reticence can deter even those that are enthusiastic about change early on
(Sun, 2013).
Effective early adopters must be seen to be similar to targeted users; high profile adopters
may not be effective in creating a herd behaviour. With this in mind, it is important to create an
implementation team that is representative of the organization as a whole, drawing from diverse
backgrounds and departments (Sun, 2013).
Team Creation
Creation of effective teams from diverse areas of the company is highly correlated with
success (Fui-Hoon Nah et al., 2003). The best available people in the organization should be
attached to the implementation team and this group of people must possess specific business and

technical knowledge. This diversity of team members, preferably from all affected departments,
is designed so that the team members can carry their newfound expertise back to their home
departments at the project conclusion. A mix of external consultants should be included so that
internal staff can learn requisite system skills (Barker & Frolick, 2003; Loh & Koh, 2004).
The ERP team should not have competing work duties. That is, the implementation
should be their only requirement and they must be assigned to it full time. Remuneration and
incentives must be appropriate to the work and team members must be rewarded for on-time and
on-budget implementation (Barker & Frolick, 2003; Loh & Koh, 2004).
In addition to the creation of effective teams, top management must assign a competent
project champion. This project champion should be a highly-placed executive possessing actual
powers to effect change. This person must be placed at the top of the project to ensure consensus
and oversee the entire implementation. This champion must ensure the morale of the entire
implementation staff and must also constantly advocate the benefits the system will provide to
the organization. The champion must act to resolve conflicts between organizational members
and fight resistance of the implementation (Fui-Hoon Nah et al., 2003). The project team and its
champion must also be granted wide latitude in their ability to make important decisions; the
team must not be required to constantly refer to top management for all operational questions or
decisions (Nah & Delgado, 2006; Soja, 2010).
The creation of the implementation team and the selection and empowerment of the
project champion are the direct responsibilities of top management. Even though top
management may not personally select each participant, it falls to top management to ensure the
team creation is correct in content and ability (von der Weth & Starker, 2010).

While team creation is an important consideration for top management, a stellar
implementation team is unlikely to fully succeed in their goals without an organization aligned
for change. Skeptical or excessively negative organizational members’ attitudes will reduce the
efficacy of communication, contribute to poorer performance and increased mistakes (von der
Weth & Starker, 2010).
Organizational culture that is misaligned with the objectives of an ERP implementation
can derail and destroy attempts at successful implementation very early in the process. Proper
change management is vital in this regard, as organizational acceptance towards adoption of new
technologies is correlated with ERP implementation success. An organization that is very
employee focused will have higher rates of success of ERP implementation. (Schniederjans &
Yadav, 2013).
Top Management Commitment
Supportive involvement of top management has been cited as the top Critical Success
Factor for successful ERP implementation. Conversely, non-optimal top management actions are
cited as a significant risk factor against successful implementation. While top management is
typically tasked with strategic planning activities that predate system implementation strategies,
and then hand off implementation to specialists, it is suggested that top management should
engage in careful management of employee behaviour. This can be accomplished by paying
careful attention to organizational cultural and environment (Martin & Huq, 2007).
In order to secure and maintain top management support for the lifetime of the
implementation project, top management bonuses should be tied to project success. Top
management must thoroughly, publically communicate their support for the project and identify

it as a top priority. Top management must be fully willing to allocate adequate resources (human,
time, capital) toward successful implementation (Loh & Koh, 2004).
Organizational change can easily breed fear: the fear of being rendered redundant, unable
to keep up with technological changes, and discomfort from being forced to change ingrained
habits, these fears can lead to large scale resistance to change. Reductions in personal power
from ERP implementations can cause resistance from middle managers in addition to resistance
from users (Naslund, 2004).
Top management must effect positive changes in employee attitudes towards the ERP by
carefully controlling the external cultural environment in addition to building intrinsic
motivation by engaging employees in the ERP pre-implementation and implementation
processes and be seen to be fully behind the project and actively engaged in its tasks. Top
management must identify which resources will be committed to the project, including for
members' training, be active in planning of vendor selection, in the piloting stage prior to roll out,
and in planning the roll out. Top management must ensure a market-driven approach is taken to
ensure the roll out will be sensitive to organizational members' needs, including making a
determination of in-house expertise and the requirements for outside assistance. It is vital that
emphatic communication to all organizational members that ERP implementation runs parallel to
all organizational. Top management must be willing to sit on steering committees, must approve
all implementation-related schedules, and must also assist in identification of risks and how to
handle them, including the loss of core team members to the implementation efforts (Martin &
Huq, 2007).
The organizational culture is of paramount importance to successful implementations.
One measure of this is social capital, which refers to levels of trust and overall relationship

strength inside organizations. Social capital, with related common goals and knowledge sharing,
can be supported, encouraged and nurtured by adequately responsible top management. This
support, along with an overall supportive organizational atmosphere, is critical to the successful
implementation of ERP systems. Without strong commitment from top management and the
requisite organizational attitude towards the change, the likelihood of implementation failure
increases (Schniederjans & Yadav, 2013).
The primary influences on implementation success according to the Klein-Sorra Model
are an appropriate atmosphere for implementation, and innovation-values fit. Atmosphere is
defined as organizational members’ shared feelings regarding management expectations for
behaviours and practices. Innovation-values fit speaks to the degree to which organizational
members' values align with the required innovation. The implication being that, as the magnitude
of the organizational climate for implementation increases, so too does the likelihood that
organizational members will happily and effectively support the implementation project and use
the system (Osei-Bryson, Dong, & Ngwenyama, 2008).
ERP implementation requires adaptation between the organization and its related IT;
change is inherently entwined in the process. Top management must carefully study and plan
how internal communications and relationships will be altered by the implementation, and also
how the organization's structure, business process, and external relationships will be altered. The
common factor is human; people must be fully engaged in the change from start to finish. As
new business processes will require a change in the way organizational members will perform
their jobs, this leads to strong levels of resistance to the new system. Top management must
analyze and determine which factors in the organizational culture will cause behavioural changes
towards the ERP. Since behavioural changes are easier to accomplish when the affected parties

have positive attitudes towards the change, top management's focus must be on positively
affecting members' attitudes towards the new ERP.
The two main levers top management can manipulate for this attitude change are their
involvement in organizational culture and the context in which ERP will affect members' roles,
responsibilities and interactions with the ERP. Organizational members' internal attitudes can be
positively dispositioned toward the ERP in the pre-implementation phase by actively engaging
them in the process. Top management must task as many members as possible to engage in data
gathering about why the ERP is necessary, what work tasks in the organization will have to be
modified, and how the organizational vision must be modified to fit the software. With regards to
personnel, active members should determine what training organizational members will require,
what new remuneration systems will be needed, how organizational structures should be
modified, and who will become members of the various ERP teams. Finally, required funding
may be examined, as well as what future changes may be anticipated. This full engagement of as
many personnel as possible will help create the buy-in necessary to ensure success (Martin &
Huq, 2007).
High levels of employee engagement early and often in the process is correlated with a
higher degree of implementation success (Beheshti et al., 2014). Research has indicated positive
correlation between company culture and implementation success. Not only does top
management foster company culture, but organizational members' support of top management is
also critical. In general, higher levels of performance can be expected to be seen from engaged
employees. (Schniederjans & Yadav, 2013)
Negative organizational feelings towards ERP systems are associated with individual
reluctance to accept the implementation. Clearly, management cannot assign every member of an

organization to work on the ERP implementation team, so management should be careful to
encourage all organizational members to use the new ERP as components are brought online. All
organizational members must benefit from constant communication from top management
regarding the utility and importance of the new ERP (Luminita & Ana-Maria, 2013).
In general, the higher the user satisfaction with the system and process of implementation,
the more likely the implementation will be successful. A positive correlation between top
management support and a favourable organizational result is also evident. This indicates the
importance of top management support, not only in communication of plans, but in the positive
effect management can have on organizational attitudes and behaviours. To accomplish this, top
management must visibly support the project, allocate required resources to its completion, and
carefully monitor progress. Top management must constantly and thoroughly communicate the
high-priority nature of the project throughout the organization, and further display their support
by setting up a strong project team (Dezdar & Ainin, 2011).
Top management must be careful to properly communicate the reasons and justifications
for ERP implementation throughout the organization; this is required so that end users'
motivation to properly use the system will be increased (Dezdar & Ainin, 2011). Failure of top
management to educate employees about benefits of the new systems can lead to destructive
reticence to accept new technologies, leading to ERP implementation failure (Beheshti et al.,
2014).
The Technology Acceptance Model (TAM) speaks to users’ acceptance and use of a
technological system, specifically, the system’s Perceived Usefulness (PU) and perceived Ease of
Use (EOU). PU is the subjective opinion of a possible user that use of the technology will
increase his or her job efficiency. Perceived EOU is the subjective opinion of a possible user

regarding the amount of effort he or she will have to commit to learning and using the system.
The greater the levels of these two variables, the higher a potential user's intrinsic motivation to
use the system (Kwak et al., 2012).
Extrinsic variables associated with high levels of PU and EOU include program features,
user training, program documentation, outside consultants' participation, computer literacy,
educational achievements, organizational role, and prior experience with ERP (Kwak et al.,
2012). This further reinforces the requirement for thorough and sustained user training since user
satisfaction is affected, in large part, by their competence in the use of ERP systems
(Schniederjans & Yadav, 2013).
Training
As training directly influences users' abilities to fully utilize the system, thorough training
regimes are necessary for management stakeholders and end users to ensure they have the
requisite skills to operate the system (Dezdar & Ainin, 2011). General education about the
benefits of ERP and specific training on the system should be undertaken throughout the
lifecycle of the implementation project. New or rotated employees must not be missed in this
continuing training. Not only will this help to reduce frustration, but will increase users'
effectiveness with the new system after implementation activities are complete. This training also
assists in the reduction of resistance against change (Ching-Chien et al., 2006; Garg & Garg,
2014).
As ERP training typically involves 10-20% of the human resources of an organization
and can take up to 10-20% of an implementation budget, it can easily end up being one of the
most expensive aspects of an implementation (Dorobăţ & Năstase, 2012; Pastor & Casanovas,
2002). Despite this being the case, training budgets are often the first thing to be cut when the

implementation exceeds the allotted budget (Fui-Hoon Nah et al., 2003). Training expenditures
are correlated with degrees of success, with less successful organizations sometimes spending as
little as 1% of their implementation budgets on training, whereas more successful organizations
can sometimes spend up to about 20% of their budget (Naslund, 2004).
Proper, sufficient, and timely training will reduce the organizational resistance to change
that typically accompanies ERP implementations while simultaneously increasing user
competence and confidence with the systems. Strong commitments to training also demonstrate
to users that the organization is willing to invest in them, which will increase their sense of job
security (Naslund, 2004).
Technical training regarding operation of the system is not the only aspect required.
Education about the purpose of the ERP, its integration into the business, the affected business
processes, and, especially, what their individual roles in the changed organization will be go a
long way to providing the buy-in required of organizational members and reducing their anxiety
about the changes (Naslund, 2004). Training has a direct effect on the variables contained in the
TAM, explaining nearly 80% of the variance involved in the Ease of Use variable towards the
ERP. Further to this finding, it was determined that user participation in the study and
implementation of the system is itself positively correlated with users’ view of the usefulness of
the system (Bradley & Lee, 2007).
Project Management
As ERP implementation success is measured in quantifiable terms, it lends itself well to
project management techniques. Implementation scope must be clearly defined and managed.
Expansion of the project scope must be measured against program timeline and budgetary
restrictions, and approved before changes are made. These changes must be supported with an

adequate business case (Fui-Hoon Nah et al., 2003). The scope management must be strict, with
the scoping document fully codified, agreed to by all stakeholders, and signed off. Early
successful deliverables are important to the project as wins for the team to celebrate, helping to
create motivation in the team. Constant tracking of project metrics is vital in order to determine
how the project is proceeding, and also to be able to take corrective measures when possible
(Loh & Koh, 2004).
Contributing factors to the successful use of the project management technique are varied.
As mentioned, a clearly defined scope is the absolute starting point. Detailed plans with full
visibility for all users are required. The participation of a skilled project team, including outside
consultant/vendor representatives and internal staff from diverse backgrounds inside the
company will help to ensure success and assist in the dissemination of system knowledge
throughout the organization (Ferratt, Ahire, & De, 2006).
Technical Focus
Organizational Capability Maturity
Organizational position on the Capability Maturity Model plays an important role in ERP
implementation success. In-house experience with IT infrastructure increases an organization's
abilities to deal with complex implementation tasks (Schniederjans & Yadav, 2013). The
Capability Maturity Model (CMM) is an objective benchmarking tool that contains 5 levels
ranking organizations based on the organizations' ability to reliably follow codified business
practices and produce consistent outcomes. Beginning from Level 1 (Initial) which describes
organizational IT processes as ad hoc through to Level 5 (Optimized) which describes
organizations using continuous improvement to better their controlled processes. As the CMM
scale is indicative of organizations’ ability to use IT to its full potential, positioning on the CMM

scale was predicted to be directly related to implementation project outcomes, which is what was
found. Not only does CMM positioning predict the quality of an installation, but it is also
positively correlated with superior project performance, such as reduced development efforts and
implementation times (Subramanian, Jiang, & Klein, 2007).
Business Process Reengineering
Business process reengineering is the act of modifying business processes to improve
efficiency. With respect to ERP implementations, BPR requires altering business processes to
match the pre-loaded best practices that come with the ERP system. Cited as one of the main
reasons that companies abandon ERP implementations, internal business processes must be
altered to fit the ERP system. Companies must endeavour to avoid customization of the ERP as
much as possible, as this increases costs and the likelihood of errors, and makes future upgrades
more difficult and expensive (Jarrar, Al-Mudimigh, & Zairi, 2000; Loh & Koh, 2004).
In order to benefit from system best practices, BPR must be performed frequently.
Organizations must accept ERP bundled best practices whenever possible. Once the ERP is
implemented, BPR must continue in order to take advantage of updated best practices when
available (Shirouyehzad, Dabestani, & Badakhshian, 2011). Interestingly, one study (Ram et al.,
2013) failed to find any causal link between BPR and implementation success. The authors note
that this finding was consistent with an earlier study from 2003, but that the results from 2003
were arrived at using a different method. The authors note that the effects of BPR may make
themselves felt through mediating effects on other aspects of ERP implementation, but admit that
testing this hypothesis would not be possible based on the authors’ study alone. The authors go
on to mention that other research has indicated strong relationships between BPR and internal
efficiency gains and improved user satisfaction. According to Ram et al., regardless of the

findings, based on the vast amount of studies supporting BPR’s positive effects on ERP
implementation, further study is required.
Conclusion
As an extremely expensive project in terms of both time and capital, an ERP
implementation requires the close coordination of many moving parts. Chief among those are
human behavioural considerations. As organizational change not only affects business processes,
but also the people performing them, the human capital of an organization must be carefully
managed before, during, and after an ERP implementation. Top management’s full and complete
commitment towards these human issues is a fundamental requirement of implementation
success. It is not sufficient that top management merely becomes familiar with the vendor and
sign the purchase orders; top management must be closely involved with all facets of an
implementation. Organizational members take their behavioural cues, in large part, from the
cultural norms of their organization that are largely affected by top management. Due to this, top
management has a major role in the implementation, on a scale consistent with the influence top
management wields in the operation of the organization as a whole. By communicating the
requirements frequently and fully, by being involved in day-to-day work for the implementation,
by involving as many organizational members as possible, and by committing the resources
required, top management displays to organizational members the absolute importance of the
ERP system and its unique strategic value to the organization. This visible commitment will
assist in breaking the inertia and resistance typical of large scale change in any organization and
help ensure the success of the implementation project.
In addition to overt support, top management must ensure adequate training is secured for
all affected parties, even when the implementation budget is stretched, and temptations to reduce

expenses are high. The staffing of implementation teams, including the best and brightest from
within the organization and from the vendor or implementation consultant is vital to not only
creating a positive disposition towards the system from all organizational members, but to
ensuring that system knowledge can be disseminated throughout the organization.
It can be seen that top management support encompasses not only directly encouraging
the implementation, but also ensuring the correct conditions, be they technical or human, exist at
the organization, for the duration of the implementation. In this way, top management can help
ensure the successful implementation of an ERP system, delivering a beneficial system on
budget and on time, that will help secure the future of the organization.

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