Examining ERP implementationsuccess from a project

environment perspectiveShahin Dezdar

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

Sulaiman AininOperations and Management Information Systems Department,Faculty of Business and Accountancy, University of Malaya,

Kuala Lumpur, Malaysia

Abstract

Purpose – The purpose of this paper is to identify factors that are crucial for the successfulimplementation of enterprise resource planning (ERP) systems. Although there are many factors thatinfluence the success, this study focuses on factors related to the ERP project environment, namely,project management, team composition and competence, and business process reengineering.

Design/methodology/approach – The study was conducted using a survey questionnairedistributed to ERP users in Iranian organizations. In total, 384 responses were collected and analyzed.

Findings – A significant relationship was found between project management and team compositionwith ERP implementation success. The better the project management activities the more likely theimplementation will be successful. Likewise, the possibility of successful implementation is higherwhen the ERP team is more coordinated and experienced.

Practical implications – ERP adopting organizations and managers could gain an understandingof the complexities inherent in ERP installations to avoid barriers and increase the likelihood ofachieving desired results. The outcomes of this study are also useful to ERP vendors and consultantsto prepare some strategies to overcome the misfit between their ERP products and ERP adoptingorganizations in developing countries.

Originality/value – This study is one of the few that examine the success of ERP implementationfrom the perspective of key stakeholders (operational/unit/functional managers). It has contributed toacademic research by producing empirical evidence to support the theories of critical success factorsand ERP implementation success. The findings may be useful to ERP vendors and other organizationsin other countries, as they could be used as a guideline for future ERP adoption and implementation.

Keywords Iran, Business process re-engineering, Project management, Team working,Team composition, Team competence, Developing countries

Paper type Research paper

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

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1463-7154.htm

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Business Process ManagementJournal

Vol. 17 No. 6, 2011pp. 919-939

q Emerald Group Publishing Limited1463-7154

DOI 10.1108/14637151111182693

and make tacit knowledge explicit (Davenport et al., 2004). Nevertheless, in order toobtain these benefits organizations have to plan ERP implementation carefully. ManyERP projects have been delayed, reported as being over budget and have requiredadditional funding (Zhang et al., 2005). In addition, the ERP system is perhaps thesingle largest IT investment an organization can make (Teltumbde, 2000). Therefore,it is important to understand which factors contribute to the occurrence of problemsand identify ways to overcome them.

Many researchers have tried to identify the factors leading to the successfulimplementation of ERP (Al-Mashari et al., 2003; Chien et al., 2007; Gargeya and Brady,2005; Ifinedo, 2008; Kim et al., 2005; Nah et al., 2001; Yusuf et al., 2004; Zhang et al., 2005).They consider several factors, including organizational, user, and technical or culturalfactors. Dezdar (2010) examines factors that affect ERP implementation success in Iranusing an integrated model which includes the ERP project environment, the organizationalenvironment and ERP system environment. The present study, however, focuses onfactors that represent the ERP project environment, as Dezdar found these factors to be themost crucial to ERP success, particularly in the Iranian context. Consequently, the aim ofthis paper is to analyze factors (related to ERP project environment) that have an influenceon ERP implementation in a developing country, namely Iran. A developing country hasbeen chosen, because there has not been much research on ERP implementation indeveloping countries (Ngai et al., 2008; Sawah et al., 2008), particularly Iran. It is hoped thatthe findings will be useful to ERP vendors as well other organizations in Iran that arecontemplating the use of ERP systems. This study is significant as it is one of the few thatexamine the success of ERP implementation from the perspective of key stakeholders. Italso provides empirical evidence to support the theories relating to the critical successfactors (CSFs) for ERP implementation success, particularly in terms of the ERP projectenvironment itself.

In the following sections, the theoretical framework and hypotheses that have beendeveloped are presented. This is followed by the research methodology chosen toconduct the study. Next, data analysis is described and the findings are discussed.Finally, conclusions and implications for future research are highlighted.

2. Theoretical frameworkThe theoretical framework (Figure 1) was developed based on the review of literatureand findings from Dezdar (2010). Dezdar developed a model that illustrates CSFs forERP implementation in Iran. His study shows that the ERP project environment is one ofthe main factors that ensure successful ERP implementation in Iran. In addition,a frequency analysis of ERP implementation CSFs from 95 journal articles in Dezdar andSulaiman (2009) indicates that factors relating to the project environment, namelyproject management (PRM), ERP, team composition and competence (TCC) and business

Figure 1.ERP project environmentand ERP implementationsuccess

H2

H1Project Management

ERP Implementation SuccessTeam Composition & Competence

Business Process Reengineering

Source: Adapted from Dezdar (2010)

H3

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process reengineering (BPR), were the top four factors after senior management support.Hence, this paper focuses on these factors relating to the ERP project environment. Thefollowing paragraphs discuss these factors.

PRM deals with diverse facets of the ERP project, such as planning, organization,information system purchase, employee selection, and monitoring of softwareimplementation (Al-Mudimigh et al., 2001). Zhang et al. (2005) suggest that ERP PRMhas five major parts: a formal implementation plan, a realistic time frame, periodicproject status meetings, an effective project leader who is also a champion, and projectteam members who are stakeholders. Strong PRM is critical for ERP projects, includingassigning responsibilities, controlling the scope, and defining and evaluating projectmilestones to avoid schedule and cost overruns. Nah et al. (2003) argue that the PRMprocess, which includes defining the scope, time and specification, is essential to ensureproject success. The scope includes modules to be implemented and all tasks to beundertaken. The time factor includes the timeliness of the project including the criticalpath, deadlines and the milestones to be defined and considered. Specifications includeall technical and non-technical issues to be considered. Umble et al. (2003) suggest thatsuccessful ERP PRM includes a clear definition of objectives, development of both awork plan and a resource plan, and careful tracking of project progress.

As mentioned earlier, PRM, refers to the extent to which timetables, milestones,workforce, equipment, and budgets are specified. In addition, it refers to theongoing management of the ERP implementation plan. Therefore, it involves not onlythe planning stages, but also the allocation of responsibilities to various players, thedefinition of milestones and critical paths, training and human resource planning, andfinally the determination of measures of success (Nah et al., 2003). To attain the desiredbenefits, the ERP implementation project progress must be carefully managed andmonitored through regular meetings and reports. The frequency of meetings has a directimpact on the effectiveness of ERP project control. Moreover, with regular meetings, theproject manger is able to establish if there are any missed deadlines (Zhang et al., 2005).Consequently, the following hypothesis was developed:

H1. Effective PRM is positively related to ERP implementation success.

The second factor influencing ERP implementation is selecting the right project teamand project manager. An ERP implementation project needs the cooperation of alldepartments within the organization. Accordingly, team composition and teamworkamong the implementer and vendor/consultant are important, as emphasized byNah and Delgado (2006). Huang et al. (2004) concluded that the team and its ability towork within the guidelines of a plan, communicate effectively, and work together areessential for the success of ERP implementation. Team members should betechnologically competent, understand the organization and its business and comefrom the departments affected by the system. The ERP team should contain the bestpeople in the organization and be cross-functional to reflect the cross-functional natureof ERP systems (Nah et al., 2007). Also important to ERP project success is theappointment of a project manager with the essential skills and authority. ERP projectmanagers must have both strategic and tactical PRM qualifications. The projectmanager should be a high-level executive sponsor who has the power to set goals andlegitimize change (Zhang et al., 2005).

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The technological and business proficiency of the team members is crucial for ERPproject success. The ERP team should be balanced, cross-functional, and comprisea mix of external consultants and internal staff, so that the internal staff can developthe necessary technical skills for system implementation. The members of the ERPteam should be expert in the organization’s processes as well as familiar with the bestbusiness practices in the industry (Nah et al., 2003). During ERP implementation,business users are responsible for ensuring that business process requirements areincorporated in the final software and that the ultimate ERP system is accepted andused by the end-users. Thus, adding business users to the project team to supplementtechnical resources is critical to project success (Somers and Nelson, 2004). It is alsoimportant that organizations empower the team to make rational decisions. In addition,the team members should only focus on the project and it should be their top priority(Nah et al., 2007). Accordingly, the following hypothesis was defined:

H2. ERP TCC is positively related to ERP implementation success.

The third factor, BPR is defined by Hammer and Champy (1993) as “thefundamental rethinking and radical redesign of business processes to achievedramatic improvements in critical measures of performance”. Most organizations thatimplement ERP are not expected to have processes and structures that are well matchedwith the structure, tools, and types of information provided by the ERP system. For thisreason, it is expected that organizations implementing ERP will have to reengineer, at aminimum, their main processes, to sustain the requirements of the ERP system.Yusuf et al. (2004) suggested that to take full advantage of ERP software, BPR is aprerequisite. Implementing an ERP system clearly changes the normal mode ofoperation within and between functions, and changes many social systems throughoutthe organization. The integrated environment of the ERP system requires theorganization to conduct business in a different way. The appropriate implementation ofan ERP system should force key business processes to be reengineered and cause arelated rearrangement in organizational control to maintain the efficiency of thereengineering activities. As a result, enterprises should be willing to accept theembedded best practice, whenever possible, and model their business processesaccording to those represented by the ERP system (Murray and Coffin, 2001).

ERP systems are built on best practices that are followed in the industry. However,inevitably, the software may not fit the working processes of an adopting firm. In suchcases, the ERP software is either customized to fit the organization’s needs better or theorganization must change its business processes to match the system (Bradford andFlorin, 2003). Nah et al. (2003) argue that, as far as possible, the software should not bemodified. It is the business that has to be changed and not the other way around.Muscatello and Chen (2008) support this line of argument and declare that organizationsshould be willing to change their businesses to fit the ERP software in order to minimizethe degree of customization needed. ERP software should be changed as little as possibleso as to minimize the possibility of errors and take advantage of newer versions andreleases of the system (Murray and Coffin, 2001). BPR is important in the early stagesfrom the initiation through the adaptation phase of the ERP implementation (Somersand Nelson, 2004). In the process of configuring the ERP system, a large amount ofreengineering should occur iteratively to take advantage of the best practices offered bythe system. Thus, the following hypothesis was defined:

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H3. Business processes reengineering is positively related to ERP implementationsuccess.

A review of the literature (Dezdar, 2010) pertaining to ERP implementation successillustrated that basically success can be categorized into four perspectives: the ERPsystem, the ERP user (user satisfaction), the ERP project, and the ERP adoptingorganization, i.e. organisational impact. Based on a frequency analysis, Dezdar foundthat organizational impact and user satisfaction were the two most frequently usedmeasures of implementation success. Therefore, the present study incorporates thesetwo measures. A number of ERP implementation success studies have been conductedusing the single success measure of user satisfaction (Grabski and Leech, 2007; Law andNgai, 2007; Holsapple et al., 2005; Wu and Wang, 2007; Calisir and Calisir, 2004;Somers et al., 2003). User satisfaction is one of the most broadly used elements forevaluating information systems success with a sound uniform instrument. Somers et al.(2003) adopted the end-user computing satisfaction instrument developed by Doll andTorkzadeh (1988) to determine end-user satisfaction with ERP systems. They identifiedseveral reliable user satisfaction dimensions, including ease of use, content, format,accuracy, and timeliness. The first element assesses the user-friendliness of the ERPsystem. The remaining four aspects relate to the usefulness of the ERP software. Theresults of Somers et al.’s (2003) study confirm that the end-user computing satisfactioninstrument maintains its stability when applied to users of ERP software.

This research adapted the definition of ERP user satisfaction from Gable et al. (2008), asthe sum of a user’s feelings and attitudes towards a variety of factors related to the deliveryof information products and services, including being up-to-date, being precise, beingcomprehensive and so on. Most of the previous research on ERP has employed items suchas presenting necessary outputs and reports and accurate information (Gable et al., 2008;Law and Ngai, 2007; Somers et al., 2003), providing output information content which isinclusive (Chien and Tsaur, 2007; Jones et al., 2008; Law and Ngai, 2007; Wu and Wang,2007), offering output and reports in a useful format (Gable et al., 2008; Sedera et al., 2007;Somers et al., 2003), presenting up-to-date information (Chien and Tsaur, 2007; Jones et al.,2008; Law and Ngai, 2007; Wu and Wang, 2007), improving employee work efficiency(Calisir and Calisir, 2004; Gable et al., 2008; Gattiker and Goodhue, 2005; Ifinedo, 2008;Nah et al., 2007), and overall satisfaction with the ERP system (Bradford and Florin, 2003;Calisir and Calisir, 2004; Gable et al., 2008; Peslak, 2006).

The second dimension of ERP implementation success is organizational impact. ERPorganizational impacts relates to the effect of ERP system implementation and usage onthe performance of the organization. Organizational impact refers to the realization ofbusiness goals and improved enterprise operating capabilities as a result of the ERPimplementation. The perceived organizational impact variable covers both effectivenessand efficiency-based performance improvements in order to capture the businessbenefits of the ERP system (Stratman and Roth, 2002). Moreover, implementing an ERPsystem can lead to improvements in business performance by improving decisionperformance, being more responsive to customer requirements, reducing costs, andimproving process efficiency (Somers et al., 2003). ERP systems combine a company’ssystem for managing its logistics, inventory, orders, shipping, customer service, sales,and several other parts. Integrating and standardizing these activities in line with thefirm’s objectives has a positive impact on the enterprise and staff in enhancingeffectiveness and efficiency and inevitably improving competitiveness. To measure

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the organizational impact of ERP system implementation, a wide range of measureshave been employed by researchers, such as increased customer service and satisfaction(Kamhawi, 2008; Law and Ngai, 2007; Zhang et al., 2005), reduced organizational costs( Jones et al., 2008; Kamhawi, 2007; Sedera et al., 2007), better use of organizational dataresources ( Jones et al., 2008; Bernroider, 2008; Ifinedo, 2008), organizational-widecommunication improvement (Ifinedo, 2008; Nah et al., 2007; Stratman and Roth, 2002),business processes rationalization (Gable et al., 2008; Law and Ngai, 2007; Sedera et al.,2007), improved overall productivity of the firm (Jones et al., 2008; Sedera et al., 2007),and increased profitability ( Jones et al., 2008; Gattiker and Goodhue, 2005).

This study adapted the organizational impact definition from Jones et al. (2008),as user perception of improved decision making, organizational communication,business process rationalization, customer satisfaction, cost reduction, and the firm’soverall productivity and performance.

3. Research methodology3.1 Research designThe aim of this study is to analyze factors (related to ERP project environment) thataffect the implementation of ERP systems in Iran. The population for the research isorganizations using ERP systems. Since there was no existing database of the ERPpopulation, various sources of data were used, including the web sites of topinternational ERP vendors, web sites of top local information system vendors, websites of Iranian governmental and non-governmental organizations that manage IT,and the annual reports of public listed organizations published by the Tehran StockExchange web site. Finally, a list of 31 ERP user companies was identified.

A survey questionnaire was utilized to collect data from the companies identified. Thequestionnaire consists of five sections: Section A: PRM, Section B: team composition,Section C: BPR, Section D: ERP implementation success, and Section E: demographics.The items for Sections A-D were adapted from relevant prior research (Bradley, 2008;Kamhawi, 2007; Muscatello and Chen, 2008; Nah et al., 2007; Zhang et al., 2005). All itemsin Sections A-D were measured using a seven-point Likert-type scale with anchorsranging from “strongly disagree” to “strongly agree”. The items used in the questionnaireand the source of references for Sections A-D are provided in the Appendix.

The questionnaire was translated into Persian, and then back-translated to ensurethat the meanings were the same as in the original. To ensure the reliability of thequestionnaire, a pilot study was conducted. The questionnaire was distributed to54 operational managers and 37 completed questionnaires were collected. The datawere tested using the SPSS 16.0 software package. It was found that all the variables’Cronbach’s a values were above 0.7. Hence, the questionnaire was considered to bereliable, as suggested by Hair et al. (2006).

As mentioned earlier, 31 organizations using ERP were contacted andasked to identify a liaison person who could distribute the questionnaire to alltheir operational/functional/unit managers who use ERP systems (562 in total).Operational/functional/unit managers were chosen as respondents because, as Bradfordand Florin (2003) stated, they are among the most knowledgeable informants regardingERP implementation projects in organizations. After repeated reminders, 411 completedquestionnaires (73 percent) were collected. The questionnaires were reviewed

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and 27 incomplete questionnaires were omitted. Therefore, 384 questionnaires wereused in the analysis.

4. FindingsThis section begins by providing a descriptive statistical analysis of the respondents’demographic profile. It then examines the impact of the factors on ERP implementationsuccess, using structural equation modeling (SEM). The SEM analysis was carried outin accordance with a two-step methodology proposed by Hair et al. (2006). According tothis procedure, after the model has been modified to create the best measurementmodel, the structural equation model can be analyzed.

4.1 Sample characteristicsThe characteristics of respondents are illustrated in Table I. There were more malerespondents than female respondents. This reflects the Iranian workforce. The resultsindicate that more than two-thirds of respondents were between 31 and 50 years oldand more than three-quarters of the respondents hold a university degree and haveworked for more than six years in their organizations. In addition, the majority ofrespondents were involved fully or partially in the ERP implementation project. Thesefigures show that the respondents have been using ERP, knew the organizationbusiness processes and the ERP implementation process and, hence, were the bestinformants to answer the survey questionnaire.

4.2 Measurement modelAssessment of the measurement model included the evaluation of convergent anddiscriminant validity for each of the measurement scales. Convergent validity was assessedusing three measures: factor loading, composite construct reliability and average varianceextracted (AVE) (Table II). The total factor loadings of the items in the measurement modelwere greater than 0.70 and each item loaded significantly (p , 0.01 in all cases) on its

Item Categories Frequency Percent

Gender Male 328 85.4Female 56 14.6

Age Below 30 years old 43 11.231-40 years old 111 28.941-50 years old 150 39.1Over 50 years old 80 20.8

Education Undergraduate 88 22.9Graduate 184 47.9Postgraduate (MS) 97 25.3Postgraduate (PhD) 15 3.9

Employment with this organisation Less than three years 36 9.4Three to five years 61 15.9Six to ten years 112 29.2More than ten years 175 45.6

Involvement in ERP implementation project Fully involved 153 39.8Partially involved 204 53.2Not involved 27 7.0

Table I.Characteristics of the

respondents

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underlying construct. The composite construct reliabilities were within the commonlyaccepted range, greater than 0.70. The average variances extracted were all above therecommended level of 0.50. Therefore, all constructs had adequate convergent validity and,hence, were retained, as recommended by Hair et al. (2006).

To confirm discriminant validity, the average variance shared between the constructand its indicators should be larger than the variance shared between the construct andother constructs. The outcomes of the convergent validity test (Table III) indicate thatconstructs share more variance with their indicators than with other constructs.

4.3 Structural modelThe second stage of the SEM process involves testing the structural model prior totesting the hypotheses. The proposed structural model was examined using AMOS

Construct Items Factor loading Composite reliability AVE

Project management PRM1 0.822 0.777 0.721PRM2 0.831PRM3 0.750PRM4 0.849PRM5 0.857PRM6 0.822

Team composition and competence TCC1 0.825 0.761 0.681TCC2 0.824TCC3 0.833TCC4 0.819TCC5 0.776

Business process reengineering BPR1 0.829 0.794 0.691BPR2 0.846BPR3 0.831BPR4 0.740BPR5 0.811

ERP implementation success SUC1 0.739 0.887 0.672SUC2 0.815SUC3 0.813SUC4 0.780SUC5 0.823SUC6 0.758SUC7 0.813SUC8 0.844

Table II.Convergent validity test

Construct PRM TCC BPR SUC

Project management (PRM) 0.849Team composition and competence (TCC) 0.56 0.825Business process reengineering (BPR) 0.44 0.47 0.831ERP implementation success (SUC) 0.63 0.59 0.40 0.820

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

Table III.Discriminant validity test

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16.0 software. The maximum likelihood method was employed to estimate allparameters and fit indices. SEM fit indices measure the extent to which the covariancematrix derived from the hypothesized model is different from the covariance matrixderived from the sample. Based on the results of the SEM fit indices, the proposedmodel provides a good fit. The normed x 2 was 2.368, which is below the recommendedlevel of 3.0. The RMSEA was 0.071, which is below the recommended 0.08 cut off. TheCFI was 0.922, which is greater than the threshold of 0.90. Overall, the hypothesizedstructural model provided an acceptable fit for the data.

In addition, the SEM path results, standardized path coefficients and t-values of allrelationships hypothesized in the model are shown in Figure 2. The non-significantrelationship (path) is shown by a dashed line in this figure. H1 posited that effectivePRM of an ERP implementation project would have a significant impact on its success.The results of SEM analysis support this hypothesis (b ¼ 0.394, p , 0.001).H2 proposed that the composition and competence of the ERP project team wouldpositively influence the success of ERP implementation. The coefficient for the pathfrom TCC to SUC is positive and significant (b ¼ 0.401, p , 0.001), which supportsH2. Finally, H3 suggested that reengineering the current business processes to alignwith ERP systems would positively influence the success of the ERP implementation.The coefficient for the path from BPR to SUC is not significant (b ¼ 0.075, p ¼ 0.381),which does not support H3.

4.4 Linear relationshipsTable IV shows the results of testing the influence of three independent variables onthe ERP implementation success (SUC) as dependent variable in Iranian organizations.

Figure 2.Path analysis results for

ERP implementationsuccess model

*p < 0.001

ProjectManagement

Business ProcessReengineering

Team Compositionand Competence

ERPImplementation

Success

H3 (β = 0.075, t = 0.876)

H2* (β = 0.401, t = 5.246)

H1* (β = 0.394, t = 6.010)

Standardisedcoefficients

Unstandardisedcoefficients

95% confidenceinterval for B

Collinearitystatistics

Model B SE b t-value Sig.Lowerbound

Upperbound Tolerance VIF

Constant 1.820 0.132 13.762 0.000 1.559 2.080PRM 0.002 0.001 0.186 2.450 0.015 0.000 0.004 0.768 1.303TCC 0.003 0.001 0.164 2.263 0.025 0.000 0.004 0.839 1.192BPR 20.002 0.001 20.131 21.754 0.081 20.005 0.000 0.790 1.265

Note: Dependent variable: SUCTable IV.

Linear regression model

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The results show that two of the independent variables, PRM (b ¼ 0.186, t ¼ 2.450,p ¼ 0.015) and TCC (b ¼ 0.164, t ¼ 2.263, p ¼ 0.025) contributed significantlyto the model at the 0.05 level, while BPR (b ¼ 20.131, t ¼ 1.754, p ¼ 0.081) was notsignificant in the model. Table IV also shows that both PRM and TCC scores werepositively related to SUC in Iranian firms. As PRM and TCC factors increase, ERPimplementation projects are more likely to be successful. Looking at the standardisedvalue of b coefficients of the PRM and TCC variables, it can be seen that theycontribute to or have almost the same impact on the dependent variable in the model.The tolerance values, which are a measure of the correlation between the predictors,are high, meaning that there are no relationships between predictors.

5. DiscussionThe results of this study support the proposed hypothesis (H1) that there is a positiverelationship between PRM and ERP implementation success. This result supports thefindings of previous researches in developed countries (Bradley, 2008; Umble et al.,2003) and developing nations (Al-Mashari et al., 2006; Chien et al., 2007; Kamhawi,2007; Nah et al., 2007; Sawah et al., 2008). ERP system implementation is a set ofcomplex activities, involving all business functions and often takes more than one yearto implement. Consequently, organizations should have an effective PRM strategy tocontrol the implementation process, avoiding an overrun of the budget and ensuringthat the implementation is on schedule. This can be done by establishing the ERPimplementation project scope (which provides a detailed project plan with clearobjectives, deliverables, realistic project milestones and end-dates) and developing atracking and monitoring mechanism to monitor the actual progress.

ERP implementing companies in Iran must have a strategy for effective PRM tooversee the process of implementing ERP to avoid overspending and ensure theimplementation follows the timetable. Implementing an ERP system is a set of difficultactions which often requires about two years of constant effort and engages all businessunits. If ERP implementing companies do not comprehend the fundamentals of PRM,they will be at risk. In an ERP implementation project, there are some areas that needconsideration, such as scope, integration plan, time, quality, cost, human resource, risk,communication, and procurement. The ERP implementation project will be successful ifits PRM can organize and balance all of the factors properly.

To achieve successful ERP implementation, Iranian firms should assign considerabletime prior to starting implementation to prepare a project plan. A project plan is crucialbecause a company must develop a comprehensive plan early and predict the costs andtime of the project. The ERP implementation plan provides a guide throughout theproject and helps the project team to maintain the right focus on the objectives and aimsof implementation. The ERP project plan is employed to steer the implementation of theproject, to ensure easy communication between ERP project team members, and torespond to management comments pertaining to the achievement and schedule of theproject. A best practice project plan would cover the project schedule and plans, riskmanagement, and monitoring and feedback, as suggested by Al-Mudimigh et al. (2001).

In summary, ERP adopting companies should clearly establish the ERPimplementation project scope and control it throughout the project. The companyshould assess all requests for scope expansion of the ERP project carefully prior toapproving them. Moreover, the company should provide and set up a detailed project

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plan with clear objectives, deliverables, realistic project milestones and end-dates andenforce them with measurable results. The next important effort is to establishthe project team and their responsibilities with a clear statement of work and define theperformance objectives to coordinate and organize the project activities properly acrossall different parties involved. Furthermore, it is vital for ERP implementation to assessproject progress on a periodic basis. A formal management process is also needed totrack and monitor the vendor’s/consultant’s activities and communications. Lastly, theproject manager/PRM team should be empowered to manage all aspects of the project,including balancing the business, technical, and change management requirements.

The findings of this research also support the proposed hypothesis (H2) that there is apositive relationship between ERP TCC and ERP implementation success. The results ofprevious researches in developed nations (Bradley, 2008; Loh and Koh, 2004; Peslak,2006) and developing countries (Al-Mashari et al., 2006; Chien et al., 2007; Ramayah et al.,2007) support the findings of the current study. An ERP implementationproject demands the effort and cooperation of technical and business experts as wellas end-users. It is necessary to form a skill-balanced project team having internal andexternal experts, managerial competencies, deep knowledge of the processes, andIT skills. Given the positive relationship between ERP TCC and ERP implementationsuccess, a number of proposals may be presented to ensure successful implementation.The organization must assign an experienced and reputable project champion/managerto lead the implementation and establish a team consisting of all stakeholders, includingusers and technical personnel. The team should be working on the project on a full-timebasis.

An ERP implementation project involves all functional units within a company. Thisproject requires the cooperation and effort of end-users, business professionals andtechnical experts. ERP adopting firms generally allocate some of their best workforce tothe team implementing ERP. A cross-functional and balanced team must be selected andprovided with clear definitions of responsibilities. The ERP project team should becomposed of business and IT specialists from an external consultant or from within theadopting organization. Using a combination of the company’s employees andconsultants to work jointly in the ERP project team will allow internal personnel todevelop the technical expertise required for the implementation of the ERP system. ERPimplementation teams must be multidisciplinary and dedicated teams, and normallyinclude IT experts, operations staff and key users, and consultants with proficiency inmanaging change and restructuring business processes. It is crucial to form an ERPteam which has a balance of skills ranging from management skills, internal andexternal professionals, IT competencies, to a thorough knowledge of procedures. Thetechnical and business skills of the ERP project team will contribute to the successfulimplementation of the ERP system. The knowledge and expertise of the ERP projectteam are vital in providing know-how in the areas where the implementing companyrequires knowledge. Lastly, the key members of the ERP project must be empowered tomake fast and valuable decisions.

To summarise, ERP adopting companies should assign an experienced andreputable project champion/manager who is committed to the ERP project. Also,an ERP implementation team should be established by selecting members from avariety of balanced and cross-functional staff and external consultants. In addition, theERP implementation team should be chosen from people with the best business

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(domain knowledge) and technical IS knowledge. Moreover, the team members shouldwork full time on the ERP implementation project and the project should be their onlypriority. Furthermore, the ERP team should be authorized to make decisions relating toall aspects of the project, including technical and business issues.

BPR was hypothesized (H3) to be positively correlated with ERP implementationsuccess. However, the hypothesized relationship was not supported. This result isnot consistent with the findings of prior research conducted in developed countries(Dowlatshahi, 2005; Peslak, 2006; Umble et al., 2003). One of the main reasons forthis discrepancy may be that Iranian social practices and cultural values differmarkedly from Western practices, as Moghadam and Assar (2008) argue. The Iranianorganizations that were studied adopted BPR to align their processes with ERPrequirements. However, they lack experience in BPR activities causing the system to fail,as Tarokh et al. (2008) describe. Ngai et al. (2008) point out that popular ERP packagesdeveloped by developed countries may not fit the requirements of organizations indeveloping countries because of the different business practices, and legal andgovernment requirements. It is suggested that Iranian organizations that are thinking ofimplementing ERP should evaluate and select an ERP package carefully, as suggestedby Ngai et al. (2008). Sawah et al. (2008) propose that organizations should have adetailed requirements specification before selecting ERP software and they shouldchoose an appropriate vendor that is able to provide a flexible ERP system.

From the perspective of the social shaping of technology theory (Williams andEdge, 1996), an ERP system is the result of social processes in a unique culturalbackground, the source of the system. Incorporated in any ERP software is a collection ofassumptions, rules, values, and practices which reflect the requirements of the socialcontext of the ERP vendor. Therefore, the selection of a particular ERP system impliesacceptance of all the social aspects fixed in the software, which reveals a corporateculture about how work should be carried out. Several prior studies have emphasizedthat the popular ERP software designed by developed countries cannot meet therequirements of enterprises in developing countries (Ngai et al., 2008). When companiesin a social context implement ERP software developed in a different social context, theywill face misfit problems. Several ERP implementing companies in Asia haveexperienced similar problems of misfit (Liang et al., 2004).

In addition, the ERP systems promoted by international vendors replicate practicesof industries in the USA or Europe. Although western management practices andphilosophies have shaped business practices of Asian companies, many of the practicesare still unique. Western practices generally need formalized information and workingprocesses. However, these processes are often incompatible with the exclusive practicesof many Iranian firms. Western ERP systems cannot provide many requirements ofIranian companies such as the report formats required by the government, Persian userinterfaces, and so on. Iranian social practices and cultural values differ noticeably fromWestern practices (Moghadam and Assar, 2008). Iranians have specific ways of doingbusiness and there is a misalignment between current business processes and ERPprocesses.

Organizational fit of the ERP system is essential to the success of the ERP system.Organizational fit of the ERP system is defined as “congruence between the originalartifact of ERP and its organizational context” (Sawah et al., 2008). To ensure a closematch between the ERP adopting organization and the ERP system, companies should

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choose ERP software that corresponds closely to their business process. Given that it isalmost impossible to obtain a complete match between business requirementsand an ERP system, the implementing company can either modify the ERP system(software adaptation) to adapt to its processes or modify its processes to adapt to theERP system (organizational adaptation). ERP adopting companies in Iran startedreengineering business processes to align them with ERP requirements. However, theycame across two main limitations when conducting BPR. First, Iranian companies haveno background and experience in process management orientation and BPR activities.Moreover, the lack of experience of the BPR consulting companies created seriousobstacles for process reengineering in Iranian organizations. Second, there were manyIranian government rules and regulations which could not be modified or removed.Many BPR projects in Iran have failed to produce acceptable results due to legal andmanagement obstacles (Tarokh et al., 2008). Consequently, Iranian ERP adoptersshifted to customize the ERP systems, even though it took more time and cost more.ERP system customization is an effort to overturn the vendor’s preferences, resultingin new software that represents a different viewpoint about how work should beperformed in the user environment.

Based on the study’s findings and the above discussion, several suggestions are madefor ERP adopting companies and ERP vendors. First, because of government standardsand specific business conditions, companies have to conform to the business practices oftheir respective country. So, ERP systems may not be able to meet some of the uniquerequirements of the adopting companies such as different practices, data, and outputs.Any successful ERP project needs a match between the organizational processes and theERP system. Therefore, the ERP implementing company should assess and select ERPsoftware carefully. The selection of a suitable ERP system is an important step but botha time-consuming and challenging process. Companies intending to select ERP softwaremust have a detailed requirements plan. A thorough assessment of the ERP systemfeatures is necessary before selecting the ERP vendor. The main criterion for choosingERP software is that fits well with local requirements. The ERP system should becompatible with existing business processes to minimize the need for BPR. Anotherimportant principle when selecting ERP software is flexibility. The adopting companyshould select a suitable ERP vendor that is able to offer an ERP system with maximumflexibility. In addition, it is also vital for the adopting organization to select those ERPsystems that are easy to customize. In such cases, the time and money spent onmodification can be minimized.

Second, Iranian and Western cultural perspectives on changes related to BPR arevery different. Unlike Western culture, Iranian culture is more reactive, past oriented,and unwilling to make organizational changes (Moghadam and Assar, 2008). Iranianexecutives and staff are not prepared for such an enormous transformation. BPRpractices can damage Iranian firms, rather than raising the level of management of thesecompanies and their effectiveness. Convincing Iranian companies to abandon theprocesses they have put in place and implement a set of new unfamiliar procedures is agreat challenge. Therefore, any organizational change should be achieved step by step,by using a milder change strategy such as business process improvement. BPR is arevolutionary method that calls for radical rethinking and the renovation of the currentbusiness processes. In contrast with this, business process improvement involvesevolutionary and milder changes, and consequently, it would have a less drastic impact

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on the current processes of the organization (Davenport and Stoddard, 1994). As a result,following business process improvement approaches is a more suitable approach in thecontext of Iranian companies.

Third, various governmental regulations and the legal context of countries obligecompanies to have country-specific requirements. So, ERP vendors should preparethemselves to deal with problems of the environment in which their ERP software isimplemented. International ERP vendors should localize their ERP systems toreflect the characteristics of local management. Localization of ERP software means thatdevelopment of the system fits the requirements of the user’s context. The requirementsusually depend on country, language, and cultural codes. The business processes inIranian companies have developed in a specific regulatory and cultural context(Moghadam and Assar, 2008) and they are different from business models embedded ininternational ERP systems. As a result, international ERP vendors which intend topenetrate Iran’s ERP market should incorporate Iranian culture into their ERP software.International ERP vendors are advised to hire Iranian software engineers and businessanalysts to improve their ERP products.

6. ConclusionA review of the literature pertaining to factors influencing ERP implementationillustrated that there is a lack of research conducted in developing countries. This wasalso mentioned by Ngai et al. (2008). This study undertook the task of examining ERPimplementation in a developing country, namely Iran. It developed and empiricallytested a model for ERP implementation success from the ERP project environmentperspective. The proposed model analyzed the relationships between three independentvariables – PRM, ERP TCC, and BPR – with ERP implementation success as thedependent variable. The model was tested and validated with empirical data fromIranian organizations. It was found that only one variable, namely BPR, does not have apositive relationship with implementation success. As mentioned earlier this findingcontradicts the findings of prior research conducted in developed countries such asAustralia (Grabski and Leech, 2007), Canada (Peslak, 2006), and the USA (Mabert et al.,2003; Peslak, 2006; Stratman and Roth, 2002; Umble et al., 2003).

This study contributes to academic research by producing empirical evidence tosupport the theories of CSFs and ERP implementation success. The researchconfirms that PRM, and ERP TCC are positively related with successful ERPimplementation. These findings are also important if the context of this research istaken into consideration. No prior research has studied ERP implementation projectsin Iran. Therefore, this research adds to the growing body of knowledge on ERPimplementations in developing countries. In addition, this study develops a researchmodel that can be applied in other Asian, Muslim and developing countries to test itsapplicability, and to examine cross-cultural issues of ERP implementation success.Lastly, from a comprehensive review of the literature, Finney and Corbett (2007) identifya major gap in the literature, which is the lack of research into ERP CSFs and ERPimplementation success from the perspective of key stakeholders. This study is one ofvery few that examine the success of ERP implementation from the perspective of keystakeholders (operational/unit/functional managers).

This research has significant managerial implications. First, Iranian organizationsand managers could gain an understanding of the complexities inherent in ERP

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installations to avoid barriers and increase the likelihood of achieving the desiredresults. Second, the outcomes of this study are also useful to ERP vendors andconsultants in preparing some strategies to overcome the misfit between their ERPproducts and ERP adopting organizations in developing countries.

Although the findings of the current study contribute to a better understanding of thesuccessful implementation of ERP systems, there are several limitations to this study.The first limitation of this study is its generalizability. This study presents theviewpoints of corporations operating in Iran, which is located in the Middle East. It isdifficult to say whether the findings can be generalized to other regions of the world.Furthermore, ERP implementation success dimensions were measured using subjectiveand perceptual measures. This was due to the difficulty in securing the related factualdata from the participating organizations. However, the use of subjective measures iscommon practice in the literature, and this measurement approach was deemedappropriate here (Chien et al., 2007; Nah et al., 2007).

Since few empirical studies have examined ERP implementation success indeveloping countries, there are numerous paths for future research and extensions ofthis study. More studies could be conducted in developing countries in the Middle East,North Africa and other Muslim countries. Moreover, this study focuses on the factorsrelated to the ERP project environment for successful ERP implementation.Future research could examine other factors relating to the organization of the ERPsystem itself.

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Appendix

Variable/item Sources

Project managementThe project scope was clearly established andcontrolled

Muscatello and Chen (2008), Sedera and Dey(2006), Nah and Delgado (2006)

A detailed project plan (i.e. the activities to coverat each stage) was provided and established

Muscatello and Chen (2008), Nah et al. (2007),Kamhawi (2007), Ehie and Madsen (2005)

Realistic project milestones and end dates weredefined and set with measurable results

Nah et al. (2007), Sedera and Dey (2006), Nah andDelgado (2006), Ehie and Madsen (2005)

The responsibility for all parts of theimplementation project was defined and assigned

Muscatello and Chen (2008), Nah et al. (2007),Sedera and Dey (2006), Nah and Delgado (2006)

The project activities across all affected partieswere coordinated and organized properly

Nah and Delgado (2006), Sedera and Dey (2006),Nah et al. (2003)

There was a formal management process to trackand monitor the vendor activities

Muscatello and Chen (2008), Nah et al. (2003),Stratman and Roth (2002)

The project progress was reviewed and assessedon a periodic basis

Muscatello and Chen (2008), Nah et al. (2003),Zhang et al. (2003), Stratman and Roth (2002)

Team competence and compositionThe project had an experienced and reputableproject champion/manager who was committed tothe ERP project

Bradley (2008), Sedera and Dey (2006), Nah andDelgado (2006), Zhang et al. (2003), Stratman andRoth (2002)

A variety of balanced or cross-functional teammembers were selected for the ERPimplementation

Nah et al. (2003, 2007), Nah and Delgado (2006),Ehie and Madsen (2005), Kim et al. (2005)

The people selected for ERP implementationteams had the best business (domain knowledge)and technical knowledge

Nah et al. (2003, 2007), Wu and Wang (2007),Sedera and Dey (2006), Ehie and Madsen (2005)

The implementation team was empowered tomake decisions relating to the project

Sedera and Dey (2006), Nah and Delgado (2006),Nah et al. (2003)

Those selected for the ERP implementation wereworking on the project full time as their onlypriority

Bradley (2008), Nah et al. (003, 2007), Sedera andDey (2006), Nah and Delgado (2006)

Sufficient incentives or compensation were givento those selected for the ERP project

Bradley (2008), Nah et al. (2007), Nah and Delgado(2006), Sedera and Dey (2006)

Business process reengineeringOur firm relied heavily on reengineering itsbusiness processes to fit ERP systems withminimal ERP customization

Muscatello and Chen (2008), Kamhawi (2007),Sedera and Dey (2006), Ehie and Madsen (2005),Nah et al. (2003), Bradford and Florin (2003),Zhang et al. (2003)

Our firm initially mapped out (identified anddocumented) existing business processes

Muscatello and Chen (2008), Ehie and Madsen(2005), Huang et al. (2004)

Our firm standardized the business processes toalign with the ERP as far as possible

Muscatello and Chen (2008), Law and Ngai (2007),Ehie and Madsen (2005), Hong and Kim (2002)

Our firm analyzed and integrated redundant andinconsistent organizational processes to alignwith the ERP

Muscatello and Chen (2008), Hong and Kim (2002)

Our firm developed new organizational processesto align with the ERP

Kim et al. (2005), Hong and Kim (2002)

Our firm tried to customize the ERP systems toour business processes with a minimal amount ofBPR (reverse coded)

Kamhawi (2007), Sedera and Dey (2006), Huanget al. (2004), Nah et al. (2003)

Table AI.Items used to measure theERP project environmentand source of references

ERPimplementation

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toim

pro

ve

org

aniz

atio

nal

-wid

eco

mm

un

icat

ion

and

shar

ing

ofin

form

atio

nac

ross

the

ente

rpri

seIfi

ned

o(2

008)

,N

ahet

al.

(200

7),

Str

atm

anan

dR

oth

(200

2)

Imp

lem

enti

ng

the

ER

Psy

stem

has

hel

ped

toim

pro

ve

and

rati

onal

ize

bu

sin

ess

pro

cess

esan

dto

elim

inat

ere

du

nd

ant

task

sK

amh

awi

(200

8),

Ber

nro

ider

(200

8),

Gab

leet

al.

(200

8),

Ifin

edo

(200

8),

Law

and

Ng

ai(2

007)

,S

eder

aet

al.

(200

7)Im

ple

men

tin

gth

eE

RP

syst

emh

ash

elp

edto

incr

ease

(in

tern

alor

exte

rnal

)se

rvic

e/sa

tisf

acti

onK

amh

awi

(200

8),

Jon

eset

al.

(200

8),

Ber

nro

ider

(200

8),

Ifin

edo

(200

8),

Law

and

Ng

ai(2

007)

,Z

han

get

al.

(200

5)Im

ple

men

tin

gth

eE

RP

syst

emh

ash

elp

edto

red

uce

org

aniz

atio

nal

cost

Jon

esetal.

(200

8),I

fin

edo

(200

8),K

amh

awi(

2007

),S

eder

aetal.

(200

7),Z

han

get

al.

(200

5)Im

ple

men

tin

gth

eE

RP

syst

emh

ash

elp

edto

imp

rov

em

anag

eria

lef

fici

ency

and

effe

ctiv

enes

sJo

nes

etal.

(200

8),

Ifin

edo

(200

8),

Hu

anget

al.

(200

4)

Imp

lem

enti

ng

the

ER

Psy

stem

has

hel

ped

toim

pro

ve

the

firm

’sov

eral

lp

rod

uct

ivit

yJo

nes

etal.

(200

8),K

amh

awi(

2008

),G

ableetal.

(200

8),I

fin

edo

(200

8),S

eder

aet

al.

(200

7)Im

ple

men

tin

gth

eE

RP

syst

emh

ash

elp

edto

imp

rov

eth

efi

rm’s

over

all

bu

sin

ess

per

form

ance

/pro

fita

bil

ity

Jon

eset

al.

(200

8),

Ber

nro

ider

(200

8),

Gat

tik

eran

dG

ood

hu

e(2

005)

Table AII.Items used for measuringERP implementationsuccess and sourceof references

BPMJ17,6

938

About the authorsShahin Dezdar received his PhD from University of Malaya, Malaysia, MS degree in industrialmanagement and his BS in Industrial Engineering from Amir-Kabir University of Technology(Tehran Polytechnic) in Iran. He has been managing several large projects in enterprise systemsimplementation and management consultancy in Iran. His research interests include ERPsystems implementation, IT/IS planning and management, and strategic management. Hisresearch has been published in Industrial Management & Data Systems and several internationalconferences proceedings.

Sulaiman Ainin obtained her PhD from the University of Birmingham and her MBA fromUniversity of Stirling. She currently teaches management information system related courses atthe Faculty of Business and Accountancy, University of Malaya. Her research interests includetechnology adoption and acceptance, technology diffusion and digital divide and e-commerceapplications. Sulaiman Ainin is the corresponding author and can be contacted at: ainins@um.edu.my

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ERPimplementation

success

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