Critical success factors for ERP implementations

2009 from International Journal of Operations and Production Management – “This paper explores the Critical Success Factors (CSFs) of Enterprise Resource Planning (ERP) system implementation at Small and Medium sized Enterprises (SMEs)…

Operational process discipline. The concept of process discipline has been formalized by Collins and Schmenner (1993) and Collins et al. (1998). In our study, companies were asked about documentation and consistency in executing operational processes (i.e. information flows) prior to the implementation. Companies having greater consistency prior to implementation appeared to achieve more successful implementations regardless of the level of documentation. The two unsuccessful cases had good documentation, but low discipline in adhering to standards set in documents. For example, Company 4 cited ISO audits that revealed non-conformance in sales and engineering. Company 3’s poor record led to problems such as excess procurement to buffer for inaccurate inventory data; as the Accounting Manager indicated, “We were a custom job shop with “craftsmen‟ who would each do things a little differently. The BOMs [bills of materials] were “loose‟ and standard routings were non-existent… it was very dysfunctional.” Consequently, both companies had difficulty adhering to processes that were newly developed by the ERP.

Overall, it seems that having inconsistent operational processes conflicts with the procedural rigidity of ERPs. Where such inconsistency exists, it may be necessary to carry out some process benchmarking and improvement prior to enforcing standardized procedures brought in by the ERP. This finding looks consistent with Schniederjans and Kim‟s (2003) conclusion (from a large company survey) that best implementations involve reengineering processes before rather than after the ERP introduction. Ross and Vitale (2000) similarly stated that ERP implementations posed challenges as they “... were instilling discipline into relatively undisciplined organizations.” (p. 240).

Thus, it appears that operational process discipline should be identified as a major CSF for ERP introduction at SMEs, especially given their frequently informal type of environment..."

180 View – Thanks go to Bluelink for alerting us to this article. For a quick summary of the CSF’s by Bluelink, click here.

I have only copied the first CSF above as it discusses a number of very interesting points. There is an assumption that ERP systems impose standardization. I disagree in that ERP systems have flexibility to accommodate different business processes. However, the implementation team may decide for different reasons that standardization is a good idea.

It seems that undisciplined organizations run into problems with standardization of business processes. This can also happen for many reasons. It may because there are different business units that do things differently to maximize their profitability and don’t want corporate to impose standards.

Another point raised is “that best implementations involve reengineering processes before rather than after the ERP introduction”. I disagree. Reengineering should take place during the implementation. Why not leverage existing business processes embedded in an ERP system than try to reinvent processes or create processes that are too expensive to implement.

In any event, the red flag needs to go up early for an implementation where there is a lack of standardization. When there are strategic reasons for non-standardization, the implementation should accommodate it. When the reasons for non-standardization have more to do with personal preferences or power, the implementation team needs to have the full backing of senior management to enforce standardization.