Enterprise Resource Planning Success A Management Theory Approach To Critical Success Factors

ENTERPRISE RESOURCE PLANNING SUCCESS:
A MANAGEMENT THEORY APPROACH TO CRITICAL

SUCCESS FACTORS
BY
JOSEPH BRADLEY
A Dissertation submitted to the Faculty of Claremont Graduate University in
partial fulfillment of the requirements for the degree of Doctor of Philosophy
in the Graduate Faculty of Executive Management
CLAREMONT, CALIFORNIA
2004
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Abstract Of The Dissertation
ENTERPRISE RESOURCE PLANNING SUCCESS:

A MANAGEMENT THEORY APPROACH TO
CRITICAL SUCCESS FACTORS
by
JOSEPH BRADLEY
CLAREMONT GRADUATE UNIVERSITY: 2004
This study examines the critical success factors for implementing

Enterprise Resource Planning systems in the framework of classical
management theory. Sneller (1986), in an earlier study, identified critical
success factors in the implementation of materials requirements planning
systems (MRP). Since the Sneller study, software vendors have enhanced the
functionality of MRP systems, first by developing manufacturing resource
planning systems (MRP II) and subsequently by developing enterprise resource
planning systems (ERP). As a result of expanded functionality, implementation
of such systems affects a much wider portion of the business enterprise than
operations and logistics. ERP systems are complex and expensive to
implement. This study will examine critical success factors for ERP systems
implementation suggested in the Information Systems and ERP literature.
Snellers work on MRP surveyed material managers, as MRP dealt with their
functional areas of responsibilities. This study surveys a wider range of top
functional managers to reflect wider organizational impact of the expanded

functionality of ERP. Eight implementation projects were examined. This study
uses a six dimensional view (William H. DeLone & McLean, 1992) of success
compared to the two dimensional view of success used by Sneller.
The purpose of this research is to investigate the critical success factors
for a successful ERP implementation. Additional questions that will be
investigated are:
Are the companys specific goals for embarking on an ERP project related
to project success?
- Is prior organizational experience with a major systems implementation

(such as MRP or MRP II) a critical success factor?
Does an ERP system lead to competitive advantage, or is it a competitive

necessity?
The study finds that the experience of the project manager, quantity and
quality of training and the effectiveness of a project champion lead to successful

implementations. Both successful and unsuccessful firms use practices such as
establishment of a project headed by a project manager, training, use of
consultants, and control by a steering committee. No evidence was found to
support integration of business processing and IT planning, reporting level of
project manager, involvement of general management or role of management in
reducing user resistance.
ACKNOWLEDGMENTS
The journey to a PhD is not completed without the support, friendship and
advice of numerous people and organizations.
The College of Business at Central Washington University provided me
financial support for the production and mailing of my questionnaires and travel
to Houston to conduct three case studies.
Loren Carroll, a friend and business associate since 1965, was kind
enough to allow me to conduct case studies in the two companies he manages,
M-l Drilling Fluids and Smith International Inc. Janet Hall, Director of Information
Technology at M-l Drilling Fluid, arranged the details my case study visits at both
M-l and Smith and proof read the M-l case for accuracy. Many other Smith and
M-l employees took their time to discuss their involvement in the ERP project.
The faculty at the Drucker Graduate School of Management all contributed
to my education in management. I like to mention a few who had a special
impact.
Richard Ellsworth got me hooked on the Drucker EMBA program

with his Current Issues in Strategic Management class, my first
class in the EMBA program.
Vijay Sathe ignited my desire to continue studying management

and to pursue a doctoral degree in his course in Strategy and
Organizations.
Peter Ring Smith (Visiting Professor from Loyola Marymount

University) provided me with the confidence that I could complete
the PhD program, treating all of us in his strategy literature review
as emerging scholars.
Robin Cooper provided me with the desire to continue my
education and the inspiration to embark on a teaching career.
Don Griesinger provided support to me along with all the doctoral
students in his EMGT 494 doctoral research seminars and literature
review class.
My dissertation committee provided immeasurable support and
encouragement. My chair, Paul Gray, provided me the guidance, help,
inspiration, and encouragement I needed to complete the dissertation.
Members of my cohort group of the entering PhD class of 1998, Marie
Tumolo and Olivia Neece, were an important source of support and
encouragement. Drucker students Bill Allison and Bennett McClellan assisted in
contacts for case studies and questionnaires.
My wife, Marilyn, endured my absence weekends and evenings and my
stress while attending classes and writing my dissertation, even though she
thought I was crazy embarking on a new career when she thought I should be
thinking about retirement and taking life easier. She also folded and stuffed
hundreds of questionnaires for me.
Thanks to all of you.
vii
TABLE OF CONTENTS
CHAPTER 1- INTRODUCTION
DESCRIPTION OF ERP SYSTEMS
WHY DO FIRMS ADOPT ERP SYSTEMS?
WHY DO FIRMS NOT ADOPT ERP SYSTEMS?
11
RISKS ASSOCIATED WITH ERP IMPLEMENTATION
13
CRITICAL SUCCESS FACTORS
15
CRITICAL SUCCESS FACTORS FOUND

PREVIOUSLY
16
DEFINITION OF SUCCESS
22
IMPORTANCE OF TOPIC
24
CHANGES SINCE SNELLERS STUDY
26
CHAPTER II - LITERATURE REVIEW
28
OVERVIEW
28
MRP, MRPII AND ERPAN EVOLUTION
28
OPERATIONAL PLANNING MODEL
37
PLANNING
38
ORGANIZING
40
STAFFING
42
LEADING
47
CONTROLLING
51
MEASURES OF SUCCESS
53
viii
CHAPTER III - RESEARCH QUESTION FRAMEWORK, AND

METHODOLOGY
59
METHODS
65
CASE STUDIES
65
QUESTIONNAIRE
66
CHAPTER IV - CASE STUDIES
73
INTRODUCTION
73
CASE 1 - PACIFIC CLAY PRODUCTS INC
77
CASE 2 & 3 SMITH INTERNATIONAL, INC.
91
CASE 2 - SMITH BITS/SMITH SERVICES
93
CASE 3 - M-l, LLC
103
CASE 4 - PACIFIC AEROSPACE
117
CASE 5 - LITTON INDUSTRIES
125
CASE 6 - HALLIBURTON
136
CASE 7 - PACCAR / KENMEX
145
CASE 8 - NORTHROP GRUMMAN
153
SUMMARY OF CASE STUDIES
159
CHAPTER V ANALYSIS METHODS AND RESULTS
162
DEMOGRAPHIC INFORMATION
163
SUCCESSFUL VS. UNSUCCESSFUL
166
HYPOTHESES
168
OTHER FINDING
225
COMPANY GOALS
225
ix
COMPETITIVE ADVANTAGE
PRIOR MAJOR SYSTEMS IMPLEMENTATION
EXPERIENCE
229
231
CHAPTER VI. CONCLUSIONS
233
APPENDIX 1. ERP IMPLEMENTATION QUESTIONNAIRE
262
APPENDIX II. QUESTIONNAIRE TRANSMITTAL LETTER
274
APPENDIX III. CASE STUDY FIRM CONSENT LETTER
276
APPENDIX IV. CASE STUDY INDIVIDUAL CONSENT LETTER
278
APPENDIX V. CASE STUDY INTERVIEW QUESTIONS
280
APPENDIX VI. MRP IMPLEMENTATION QUESTIONNAIRE
288
APPENDIX VII FREQUENCY ANALYSIS OF INDEPENDENT

VARIABLES
295
APPENDIX VIII GLOSSARY
309
REFERENCES
312
Index of Tables
Table No.
Chapter 1
1-1
I-2
Chapter II
11-1
II-2
Chapter IV
IV-1
IV-2
Chapter V
V-1
V-2
V-3
V-4
V-5
V-6
V-7
V-8
V-9
V-10
V-11
V-12
V-13
V-14
V-15
V-16
V-17
V-18
V-19
V-20
V-21
V-22
V-23
Description
Page
Some Functions Available in SAP R/3

Nahs Critical Success Factors
6
21
Evolution of ERP Systems

Typical SAP Functions
29
35
Summary of Case Study Site Characteristics

Summary of Case Study Findings
76
160
Questionnaire Mailing Summary

Primary Products of Respondents (V57)
Sales Volume of Respondents (V58)
Implementation Completion Dates (V59)
ERP Software Used by Respondents (V60)
Implementation Method (V61)
Functional Area of Respondent (V62)
Variable V1 Success
Background Information Results
Planning Variables - V15 through V18
T-test for Variables V15 to V18
Multiple Regression Results of Variables V15
with V12
with V13
Organizing Variables - V19 through V22
with V12
with V13
Organizational Variables - V23 through V26
with V12
Staffing Variables - V27 through V-30
xi
to V18
162
164
164
164
165
165
166
166
168
173
175
176
to V18
177
to V22
to V22
178
179
180
182
to V22
183
to V37
184
185
186
187
188
V-24
V-25
V-26
V-27
V-28
V-29
V-30
V-31
V-32
V-33
V-34
V-35
V-36
V-37
V-38
V-39
V-40
V-41
V-42
V-43
V-44
V-45
V-46
V-47
V-48
V-49
V-50
V-51
V-52
Multiple Regression Results of Variables V27 to V30

Standardized Coefficients and Correlations of
Predictor Variables V27 and V30
with V12
Predictor Variables with V12r
with V13
Predictor Variables V27 to V30 with V13r
Staffing Variables - V31 through V37
T-test for Variables V31 through V37
with V12
Predictor Variables V31 to V37 with V12r
through V37 with V13
Leading Variables - V16, V18, V42
T-test for Variable V16, V18 and V42
Leading Variables - V43 through V45
Predictor Variable V43
with V12
Multiple Regression Results of Variables V
with V12
with V12
with V13
Summary of Statistical Analysis of Hypotheses
189
190
192
193
194
195
196
197
200
201
202
204
205
207
208
209
210
210
211
212
213
214
215
216
218
219
220
222
224
V-53
V-54
V-55
V-56
V-57
V-58
V-59
Chapter VI
VI-1
Company Specific Goals for ERP Implementation

(V14)
Company Specific Goals (V14)
Multiple Regression Results of Variables V14a1
through V14g1
T-test for Variable V55
Multiple Regression Analysis Results of Variable
V55
Predictor Variable V100
Prior Major Systems Experience (V56)
225
Levels of Business Planning and IT Planning

Integration
235
225
228
229
229
231
231
Index of Figures
11-1
II-2
Evolution of ERP System

Information Systems Success Model
29
56
CHAPTER I
INTRODUCTION
Enterprise systems appear to be a dream come true. These
commercial software packages promise the integration of all the
information flowing through the company - financial and accounting
information, human resource information, supply chain information,
customer information. For managers who have struggled, at great
expense and with great frustration, with incompatible information
systems and inconsistent operating practices, the promise of an offthe-shelf solution to the problem of business integration is
enticing.(Davenport, 1998)
In the mid-1990s, businesses around the world were spending

approximately $10 billion per year on enterprise resource planning systems
(ERP) and about the same amount on consultants to install these systems
(Davenport, 1998). An AMR study states that in 2001 firms were expected to
invest more than $47 billion on enterprise systems (ES) packages (Cotteleer,
2002). Another AMR research study indicates that ERP will remain the biggest
segment of large and mid-size companies IT application budgets through 2004
(Seewald, 2002). The magnitude of this expenditure makes knowledge of the
factors most likely to result in successful ERP systems implementation a critically
important topic for managers embarking on such projects and academics
studying such implementations. Managerial and economic resources are scarce
in all firms. Determination of the critical success factors will help management in
allocating resources appropriately.
In addition, ERP can be viewed as the first

1
wave of enterprise systems applications including customer relationship

management (CRM) and supply chain management (SCM). Lessons learned
from ERP will contribute to successful implementations of these systems (Brown
& Vessey, 2003).
In this introduction we will discuss the following:
1. The nature of enterprise resource planning systems
2. The reasons firms adopt these systems
3. The reasons firms do not adopt ERP systems
4. Risk associated with ERP implementation
5. Critical success factors found previously
6. Definitions of success for enterprise systems.
7. Importance of the topic
DESCRIPTION OF ENTERPRISE RESOURCE PLANNING SYSTEMS.

Enterprise resource planning systems (ERP), also known as enterprise
systems (ES), evolved from material requirements planning (MRP) systems.
ERP systems claim to be off-the-shelf solutions to a myriad of business
problems. These integrated ERP packages replace hard-to-maintain solutions
created by the IS departments of the firms or older off-the-shelf packages that
often offered only piecemeal solutions. These older systems are frequently
referred to as legacy systems. Legacy systems are transaction processing
systems designed to perform specific tasks. Many of these systems became
outdated as business needs changed and the hardware and software available in
3
the marketplace improved (Applegate, McFarlan, & McKenney, 1999). However,
ERP systems are expensive and difficult to implement, often imposing their own
logic on a companys strategy and existing culture (Pozzebon, 2000). ERP
implementations are often complex and experience serious problems. The
determinants of a successful ERP system implementation are still poorly
understood. (Davenport, 1998) A recent summary of ERP literature states that
while the difficulties and failures or ERP implementations have been widely cited
in the literature, research on critical success factors (CSFs) in ERP
implementation is rare and fragmented. (Nah, Lau, & Kuang, 2001)
ERP implementations can be characterized by three distinguishing
characteristics. (Somers, Ragowsky, Nelson, & Stern, 2001)
1.
These systems are profoundly complex pieces of software, and
installing them requires large investments of money, time and expertise.

(Davenport, 1998)
2.
ERP systems are packages that may require changes in business
processes and procedures, may induce customization, and leave the firm
dependent on the vendor for support and updates (Lucas, Walton, & Ginsberg,
1988).
3.
The adopting firm is usually required to reengineer business
processes. ERP implementations must be managed as a program of broad

organizational change rather than a software implementation (Markus & Tanis,
2000; Somers et al., 2001).
MRP systems were developed in the 1960s and 1970s as the central
activity in material planning and control. The managerial objectives of MRP are
to provide the right part at the right time to meet the schedules for completed
products. (Vollmann, Berry, & Whybark, 1984) MRP systems work backwards
from the required delivery date of a product to the date raw material orders need
to be placed and the date production of the product should begin. MRP
accomplished these tasks by considering required production time, inventory on
hand, inventory on order, and work in process. Based on this analysis, the MRP
system recommends when additional material should be purchased and in what
quantities. When properly used, this technique reduces the level of inventory
necessary and still ensures raw materials will be on hand when needed for
production. Reducing the amount of inventory required to be on hand frees up
cash for other purposes and minimizes the firms exposure to inventory losses
from obsolescence. A weakness of MRP systems was that these systems use
an infinite capacity-planning model (Palaniswamy & Frank, 2000). This model
does not take into account the capacity of each work center and can suggest an
unrealistic schedule that would overload individual work centers.
An extension of MRP is manufacturing resource planning or MRP II. In
addition to planning inventory purchases, MRP II used the database to calculate
expected cash flows, machinery and equipment needs, labor needs and tooling
requirements (Schonberger, 1986). MRP II is a sequential technique that is
used for converting a master production schedule (MPS) of the end products into
a detailed schedule for raw materials and components. It starts with sales and
operation planning and demand management and ends with a detailed schedule
for components to be made in-house as well as purchased from vendors.
(Palaniswamy & Frank, 2000)
MRP II is an automated system that makes scheduling and planning of all
of a manufacturing enterprises resources practical. (Gray, 1986) Gray points
out the MRP II solves what Oliver Wight, a pioneer in the inventory and
production control field, defined as the universal manufacturing equation; what
are we going to make? What does it take to make it? What do we have? What
do we need to get? MRP II answers the question, What do we really need, and
when do we need it? by taking a companys high level plans and breaking them
down to detailed schedules for material, capacity, cash and the like.
ERP expands the functionality of MRP and MRP II by integrating
information throughout the entire organization in a single database. A typical
ERP system offers functionality in financial information, human resources,
operations and logistics, and sales and marketing, in addition to operations and
logistics. The great appeal of ERPs is that employees enter information only
once and that information is then available to all systems companywide....This
means everyone in the company can make decisions based on accurate, real
time information (Laughlin, 1999).
Laughlin describes the typical processes involved in processing an order
using an ERP system. For example, a customer service agent receives a phone
call from an existing customer. The agent quickly locates the customers
account, records the order details, prices the order, and checks the availability
date. The customer confirms the order details and the agent books the order.
That single entry triggers everything from the allocation of the finished product
against the order to delivery and billing. That is, based on existing demand and
allocation rules, the ERP will determine whether the product should come from
current finished goods in a warehouse, in-process goods, scheduled production,
or new production. It will set the order up for shipment based on information from
either the customer or the customer master record, and, once the order is
shipped, prepare an invoice and an accounts receivable entry (Laughlin, 1999).
TABLE 1-1. SOME FUNCTIONS AVAILABLE IN SAP R/3
Financials
Accounts receivable and payable
Asset accounting
Cash management and forecasting
Cost-element and cost-center
Executive information systems
Financial consolidations
General ledger
Product-cost accounting
Profitability analysis
Profit-center accounting
Standard and period-related costing
Operations and Loqistics

Inventory management
Material requirements planning
Plant maintenance
Production planning
Project management
Purchasing
Quality management
Routing management
Shipping
Vendor evaluation
Human Resources
Human-resources time accounting
Payroll
Personnel planning
Travel expenses
Sales and Marketina

Order management
Pricing
Sales management
Sales planning
Source: Davenport (1998)
A list of some of the functions of SAP R/3, a popular ERP package, is

shown in Table 1-1. Companies adopting ERP can install some or all of the
functions as needed.
ERP systems contain several configuration options for each business
process based on best practices. However, this functionality may not fit the
existing business processes of the firm adopting ERP, forcing the firm to
reengineer its business processes to conform to the software package options.
The resulting organizational change may be a significant challenge to the firm.
ERP implementations usually require people to create new work relationships,
share information that was once closely guarded, and make business decisions
they never were required to make (Appleton, 1997). Laughlin describes
organizational resistance as a common but intangible foe and a frequent source
of train wrecks in ERP implementations (Laughlin, 1999).
WHY DO FIRMS ADOPT ERP?
Firms adopting ERP may have widely different goals. Markus and Tanis
(2000) identify technical reasons and business reasons for adoption. Among the
technical reasons are:
Reducing systems operating costs,
Solving specific problems such as Y2K,
Accommodating increased system capacity, and
Solving maintenance problems with legacy systems.
Business reasons may include:
The ability to present a single face to the customer
The ability to quote realistic delivery dates based on current inventory and
shop capacity,
Accommodation of business growth,
Improvement of informal or inefficient business processes,
Standardize data,
Reduction of inventory carrying costs, and
Elimination of delays and errors in filling customer orders.

Watson and Schneider (1999) attribute the rapid growth of the commercial
market for ERP to the following factors:
Use of the popular client/server platform
Can be used as an enabler for reengineering projects
Y2K compliant
Marketed to CEOs and CFOs as strategic solutions rather than

as transaction processing software
A way to outsource a significant part of the IS function. (Watson &

Schneider, 1999)
A study of member firms of the Financial Executives Institute examined

the relationship between ERP adoption and environmental, strategic and
structural determinants. The study found that ERP adoption was more likely
under the following contingencies:
Coordination is critical to the organization
The firm follows a low-cost or low-price strategy

The firm is centralized
The firm follows a top-down financial strategy
The firm differentiates itself based on technology rather than
marketing. (Banker, Janakiraman, Konstans, & Slaughter, 2000)
An example of a decision to adopt an ERP system is provided by Geneva
Pharmaceuticals, a manufacturer of generic drugs. Faced with eroding margins
and continuing price pressure, the existing systems were proving inadequate.
Data shared across business units had to be re-keyed resulting in frequent
errors. Data was locked in functional silos and did not support new processes.
Geneva adopted ERP to solve the following problems:
implement best practices in business processes,
integrate data across business units (hence reduce re-keying and
maintenance costs),
enforce data standardization (to reduce software maintenance

costs),
integrate well with new technologies or systems of acquired

companies,
provide scalability with growing product and customer base, and
be Y2K (year 2000) compliant (Bhattacherjee, 2000).
Rohm and Haas embarked on a major SAP implementation in the midst of

a 40-company buying spree that left the company in a state of technological
10
chaos, with 64 different systems running its critical tasks. The chemical industry
was at an all time low and despite sales increases from $3.7 billion to $5.3 billion,
headcount had doubled and return on equity fell by more than half to 12%.
Rohm and Haas spent over $300 million on the project. As of 2003, 80% of the
company is using SAP. (Schoenberger, 2003) For Rohm and Haas, the huge
expenditure of ERP was a strategic necessity, not a luxury.
A further reason for the adoption of complex information technologies,
such as ERP, arises from the examination of the process of information adoption.
Social groups that have a vested interest in their promotion promote the ideas
and knowledge underlying complex information technologies. Many firms
adopted these technologies with very little real understanding about their
complexity, with a resultant high level of failure (Newell, Swan, & Galliers, 2000).
New institutional theory provides further support for the adoption of
information systems marketed aggressively to CEOs and CFOs. Top managers
may adopt new system through a process of mimetic isomorphism, that is,
organizations seek legitimacy by imitating other organizations in their institutional
fields or organizations that interact in networks- i.e., customers, suppliers,
competitors. The adoption of much of the quality movement can be attributed to
this phenomenon (DiMaggio & Powell, 1983). ERP may be another example.
The role of information technology in creating sustainable competitive
advantage may be another reason for adopting new information systems.
Information technology may have a role in creating sustained competitive
11
advantage. This belief is based on the two assertions underlying a resourcebased view of the firm: 1.) that resources and capabilities are different in different
firms, 2.) and these differences can be long lasting. (Barney, 1991) Standard, off
the shelf software packages, like ERP solutions, are available to all firms that can
afford to pay for them, so ERP systems would not be the source of resource
heterogeneity. However, the capability of using packaged software system
effectively may not be homogeneous among firms. If K-Mart could imitate
WalMarts system (i.e., the hardware and software), but could not use it as
effectively as WalMart, WalMarts system could still be a source of sustained
competitive advantage (Mata, Fuerst, & Barney, 1995).
WHY FIRMS DO NOT ADOPT ERP SYSTEMS
Markus and Tanis (2000) identified three very broad categories of reasons
why firms that otherwise have all or some of the reasons to adopt ERP systems,
do not adopt it or only adopt ERP in part. These firms may adopt only certain
modules and rely on legacy systems or new custom systems for their needs.
Other firms may begin an implementation only to discontinue it for a variety of
reasons. The reason for this non-adoption or partial adoption can be categorized
as follows:
1.
Lack of feature-function fit
2.
Company growth, strategic flexibility and decentralized decision

making
3.
Availability of alternatives to increase systems integration.
12
Lack of feature-function fit may be due to the design of most ERP for
discrete manufacturing. Many companies have specialized processes common
to their industry, which may not be solved by the best practices embedded in
ERP systems. The various modules may not fully support process
manufacturing industries, such as food processing and paper manufacturing,
project industries, such as aerospace, or industries that manufacture products
with dimensionality, such as clothing or footwear.
Companies concerned with maintaining rapid growth rates, those needing
strategic flexibility and those without a top down decision making style may be
non-adopters or partial adopters of ERP systems. Dell Computer Corp. planned
full implementation of SAP R/3 but discontinued the implementation after
installing the human resource module. Dells CIO expressed concern with the
softwares ability to keep pace with Dells extraordinary growth rate. Visio, a
software company subsequently acquired by Microsoft, expressed concern with
the ability of SAP to handle the frequent changes it required to its sales analysis
and commission requirements (Markus & Tanis, 2000).
The experiences of Dell and Visio focus on the need for efficiency and
flexibility in dealing with the external environment and internal processes. In a
stable environment, mechanistic structures are appropriate consisting of high
degrees of standardization, formalization, specialization and hierarchy. In a
dynamic environment, organic structures are needed to enable organizations to
be flexible to change products, processes and structures. In these organizations
13
low level of standardization, formalization, specialization and hierarchy are most
appropriate. ERP may maximize organizational efficiency at the cost of flexibility

(Newell, Huang, Galliers, & Pan, 2003).
Lean enterprises succeed as a growth strategy for increasing sales by
trimming the companys product delivery system into a competitive weapon.
Lean enterprises have difficulty using ERP systems due to the lack of flexibility.
ERP creates many nonvalue-added transactions by making companies track
every activity and material price in the factory. This is counter to Lean
philosophy, which aims at speeding up and smoothing production (Bradford &
Mayfield, 2001).
Alternatives to ERP systems include data warehousing technologies that
integrate data from source systems for query and analysis. These systems,
sometimes described as poor mans ERP, are limited by the quality of the
underlying source systems (Markus & Tanis, 2000).
RISKS ASSOCIATED WITH ERP IMPLEMENTATION
Scott (2003) identifies risks in ERP implementations in the areas of project
risks, information systems risks, organizational risks, and external risks.
Project risks stem from the customization of purchased packages and the
difficulty of interfacing with legacy systems. When firms believe their business
process are unique, they may customize ERP software instead of adopting best
practices imbedded in a standard implementation. Data conversion can also be
a problem when firms do not clean up their data before embarking on a project.
14
Project leadership, limiting project scope, avoiding customization, and a phased
implementation (rollout) can minimize this risk (Scott, 2003).

Information systems risks arise from system performance problems. ERP
systems may be poorly configured or the hardware may need upgrading.
Another risk arises when the use of multiple vendors creates the need for
multiple interfaces. Multiple vendors contributed to the problems in the Hershey
Food Corporation implementation. Information systems risks can be minimized
by avoiding customization, use of data warehousing for reports and queries and
avoiding multivendor implementations (Scott, 2003).
Organizational risks of a bad ERP implementation can impact the firms
operating profits. Customer deliveries can be delayed putting customer
relationships at risk. Impacts can be with customers, financial performance, or
internal business objectives. Organizational risks can be minimized with training
and strong leadership, which assures that sufficient resources are allocated to
the project and inspires employees who may resist the implementation (Scott,
2003).
External risks center on litigation associated with the implementation.
Firms with implementation problems may sue consultants and/or ERP vendors.
Overbilling by consultants and use of incompetent trainees have been sources of
litigation (Scott, 2003). Gore-Tex claims its consultant promised expert staff and
delivered incompetent trainees. Managing consultants by specifying goals and
individual competence of consultants can minimized this risk (MacDonald, 1999).
15
CRITICAL SUCCESS FACTORS.

Bullen and Rockart (1981) define critical success factors (CSFs) as the
few key areas of activity in which favorable results are absolutely necessary for a
particular manager to reach his goals. They point out that an incredible number
of things can divert a managers attention. A key to a managers success is to
focus their scarcest resource of time on those things that make a difference
between success and failure (Bullen & Rockart, 1981). Banfield refers to critical
success factors as those activities that make the difference between success
and failure - or at least the difference between incremental results and
breakthrough results (Banfield, 1999).
Drucker defines two requirements of controls. Controls must follow a
principle of economy. The fewer controls needed, the more effective they will
be. A second requirement is that controls must be meaningful. One has to
control by controlling a few developments which can have significant impact on
performance and results (Drucker, 1973). Both of Druckers requirements are
consistent with the principle of critical success factors.
Bullen and Rockart identify five prime sources of critical success factors:
1.
The industrysome CSFs can be unique to the firms industry
2.
Competitive strategy and industry positiona low-cost strategy will

call for different CSFs than a differentiation strategy
3.
Environmental factorseconomy, political climate, population

trends, generally things over which a firm has no control
4.
16
Temporal factors - areas can be critical over a short period of time
5.
Managerial position - managers in different functional areas may

have different CSRs, i.e., Sales vs. Finance
Bullen and Rockart demonstrated that CSFs are hierarchical in nature.

CSFs can be identified at the industry level, the corporate level, the suborganizational level and the individual level.
CRITICAL SUCCESS FACTORS FOUND PREVIOUSLY

Sneller (1986) examined the critical success factors in the implementation
of materials requirements planning systems (MRP). He applied classical
management theory relating to the functions of a managerplanning, organizing,
staffing, leading and controlling using the Operational Management approach
described by Koontz, ODonnell, and Weihrich (1980). Snellers study was
conducted at the sub-organizational level, which was appropriate for MRP
systems as these systems impact primarily the manufacturing, and production
and inventory control functions of the firm. Because of the expanded
functionality of ERP systems compared to MRP systems, this dissertation
requires the examination of CSFs at the organizational level of analysis.
Sneller based his work on MRP installations on the results of
questionnaires sent to 50 personal acquaintances or referrals to the author and
100 material managers listed in the 1985 edition of the American Electronics
Association Directory. He believed that material managers would have the
highest probability of having knowledge of successful and unsuccessful MRP
17
implementations. Based on sixty-one responses to his survey from these

material managers for electronics companies, Sneller identified the following
critical success factors in his study of MRP:Planning.
A detailed formal plan.
Training of management and users. Testing following training is also
significant.
Organizing
Full time project manager.The higher the reporting level of project
manager the higher the probability of success.Implementation group must
be allowed discrete amount of time.Staffing
Use of a consultant is helpful but will not guarantee success if other
factors are ignored.
Leading
Senior management must show more than token support.
Controlling
Control must originate with top management and steering committee must
meet at least monthly (Sneller, 1986).
Sneller examined but failed to find a relationship between the following
management practices and project success:
The amount of user participation in planning was not related to improved

performance and user satisfaction in the implemented system.
18
The organizational reporting level of the project manager was not related to
improved performance and user satisfaction in the implemented system.
High levels of MRP systems experience and / or high levels of previous

project management experience, combined with strong motivation were not
significantly related to improved performance and user satisfaction in the
implemented system.
The use of a consultant during system implementation was not related to

improved performance and user satisfaction in the implemented system.
The use of a formal tracking system by the steering committee was not
related to improved performance and user satisfaction in the implemented
system.
Other lists of critical success factors abound in both popular and
scholarly articles, but these lists are generally based on experience or casual
observation, not controlled research.
McDonnell (2000) offered the ten critical success factors for ERP
upgrades summarized below. Although these CSFs relate to upgrading ERP
systems to a newer version I believe they may be equally applicable to new
implementations.
Spell out the strategic, tangible business and operational benefits
and find ways to measure success in achieving them. Assign
accountability and authority for those goals.
19
Make sure all top management is united behind the business goals
driving you upgrade.

Because the biggest challenge is change management, retrain staff
not only with new technical skills but also with skills that often result from
upgrades and new job descriptions.
Make good decisions faster that balance schedule and cost vs.
benefits and risk. This is especially important because such projects
cross functional lines.
Implement creative incentives for your project team to reward their
hard work and increased value.
Be rigorous about project management and the implications of your
partnerships with consultants.
Look at the big picture, establishing a global architecture before
deploying locally. Too many projects begin with a small pilot or in phases
and then need to be redone when taken to other business units or
countries
Do process re-engineering before and during the project. Its a
mistake to think you can do this later or focus on installing the software
first, which also includes many decisions on process.
Pay attention to demanding training and support needs. Dont try to
save money by cutting training costs.
20
Your organization needs to understand why the project is worth the
pain of change. Your project team needs full-time members, minus the
distractions of their real jobs. Your scope needs to be tightly focused to
resist the temptation of widening the scope and reworking the project plan
(McDonnell, 2000).
Another view of ERP success is provided by Laughlin (1999), who
identifies six components of a winning game plan for implementing ERP.
The six components are:
A motivating business justification,
Internal business support,
A strong internal owner,
An empowered and influential internal team,
Management driven change, and
A proven external partner (Laughlin, 1999).
Nah (2001) reviewed ten articles written by academics and
practitioners between 1998 and 2000 discussing What are the key critical
factors for ERP implementation success? These articles discussed eleven
critical success factors listed in Table I-2 together with the number of articles
discussing each of the factors. Nah did not distinguish whether empirical
research, case studies or other methods determined the factors mentioned.
21
TABLE I-2
Nahs Critical Success Factors
Critical Factor
No of articles
mentioning
ERP teamwork and composition

ERP project should be the teams top priority
The teams workload should be manageable
Incentives for successful implementation
Change management program and culture
A culture of shared values is conducive to success
Top management support
Align with strategic business goals
Tie management bonuses to project success
Top management priority
Business plan and vision
Tie project to specific business model
BPR and minimum customization
Willingness to change business to fit software
Software should not be modified
Effective communications
Management of communications, education and
expectations critical
Project management
Individual or group should be given responsibility for
success
Plan with well-defined tasks and accurate estimation of
effort
Software development, testing and trouble shooting
Appropriate choice of system functionality and links to
legacy systems
W ork with vendors and consultants to resolve software
problems
Monitoring and evaluation of performance
Measurement against completion dates
Monitoring through milestones and targets
Management needs information on effect of project on
business processes
Project champion
Oversee entire life cycle of project
High level executive sponsor
Business leader should be in charge
Appropriate business and IT legacy systems
Stable and successful business setting is essential
7
6
6
6
22
Brown and Vessey (2003) identify five success factors based on case
studies of a dozen ERP implementations. The five factors are:
Top management is engaged, not just involved
Project leaders are veterans and team members are decision makers
Third parties fill gaps in expertise and transfer their knowledge
Change management goes hand-in-hand with project management
A satisficing mindset prevails.

Several other authors have investigated ERP systems and the factors
critical for successful implementation. A study based on four cases identified the
following CSFs: support of senior management, redesign of business process to
fit what the software will support, investment in user training, and use of
business analysts with knowledge of both business and technology (Sumner,
1999). One study identified factors such as commitment from top management,
selection and management of consultants and employees and training on the
new system (Bingi, Sharma, & Godla, 1999). Another study identified success
factors in software projects (Reel, 1999). An additional study developed a
framework grouping success factors into strategic and tactical factors based on
eight cases and a review of the literature (Holland & Light, 1999).
DEFINITION OF SUCCESS
Snellers study relied on two dimensions, improved performance and
user satisfaction, to define a successful MRP implementation. Snellers
23
questionnaire used ten questions to operationalize these two success

dimensions.
Improved Organizational Performance.
The first dimension measures improved business performance
following an MRP implementation. White, Anderson, Schroeder and Tupy (1981)
showed that successful implementations of MRP resulted in the following
changes: increased inventory turnover, increased on-time deliveries, decreased
lead times, decreased material shortages and decreased material expediters.
User Satisfaction.
The second dimension tested by Sneller is user satisfaction. Researchers
have found functionality, equipment performance, interaction features, and office
environments provide user satisfaction in information systems. Functionality was
found to be the best predictor of user satisfaction (Bikson & Gutek, 1983; Gutek,
Bikson, & Mankin, 1984).
In addition to the above criteria, Sneller used a general question on the
return on investment of the project. The perception by the questionnaire
respondents of a positive rate of return on investment was necessary to define a
project as successful.
For purposes of this study, a six dimensional definition of success will be
used. The six dimensions measured are:
Systems quality,
Information quality,
User satisfaction,
Individual impact and
Organizational impact.
The selection of these six dimensions is discussed more fully in Chapter II.
IMPORTANCE OF TOPIC
Despite the large sums of money spent annually by business on
implementation of ERP systems the reports of implementation failures abound.
Hershey Foods embarked on an ERP investment in mid-1996 to solve its Y2K
problem and improve its ability to perform just-in-time store deliveries to its
customers (Severance & Passino, 2002). After spending $112 million on an ERP
project, Hershey Foods Corporation was unable to fill Halloween candy orders in
October 1999, resulting in a 19% drop in third quarter profits (Stedman, 1999).
As a result of Hersheys problems its stock price fell by a third and the firm lost
market share to Mars and Nestle (Severance & Passino, 2002). Hershey
estimates it suffered a 3% permanent decrease in market share from this
experience (Sutton, 2003).
A study by the PA Consulting Group found that 92% of companies are
dissatisfied with results achieved to date from their ERP implementation and only
8% achieved a positive improvement in their performance ("ERP Implementation
Disappoints Companies," 2000).
Davenport (1998) identifies several unsuccessful implementation efforts:
25
Fox-Meyer Drug claims that an ERP system led to its bankruptcy.
Mobil Europe spent hundreds of millions on ERP, but abandoned
the project when a merger partner objected.
Dell found that its ERP system did not support its new
decentralized management style.
Applied Materials gave up on its ERP implementation when it
became overwhelmed with the organizational changes it required.

Markus and Tanis identify five areas in which ERP research is important to
IS research. The areas are:
1. Financial cost and risk. ERP implementation is expensive and risky.
Several visible failures have occurred and non-academic literature is questioning
the benefits derived from such systems. Brown and Vessey (2003) observe
although failures to deliver projects on time and within budget were an old IT
story, enterprise systems held even higher risks-they could be a bet-ourcompany type of failure.
2. Technical issues. Technical challenges of ERP systems include
software selection methods, software configuration techniques, systems
integration strategies, and data quality.
3. Managerial issues. ERP implementation projects involve many
different organizations (suppliers, customers, etc.) and cut across organizational
structures. ERP implementation affects how organizations structure and manage
26
the information and presents challenges in personnel recruiting, training and

retention.
4. IT adoption, use and impact. ERP systems are widely adopted and
continue to proliferate. Questions remain regarding how effectively and
extensively the systems are used in organizations. Effects of these systems are
experienced at several levels of analysis including individual, process,
organization, and industry.
5. Integration. Integration issues include the relationship of ERP to
organizational restructuring around IT capabilities, structural changes in IT
resulting from the outsourcing of systems development and programming and the
increasing reliance on third parties of products and services, and the
effectiveness of ERP system compared with other alternatives, such as data
warehousing, middleware and looser integration strategies.
CHANGES SINCE SNELLERS STUDY

The 1986 study of MRP implementation by Sneller made an important
contribution to the literature, but factors changed with the development of ERP
systems.
1.
The level of analysis of CSFs changed from the sub-organization
level to the organization level.

2.
The very nature of ERP encompasses the entire organization
where MRP primarily affected the material management and production and
inventory management sub-organizations.
27
Sneller concluded his work on MRP with the observation that, There
appears to be a lack of good old fashioned discipline in the implementation
approaches used for projects that were unsuccessful. American management
has become very undisciplined as society itself has become undisciplined.
(Sneller, 1986) As American industry has improved its global competitiveness
during the nineties, have the values of classical management been a factor?
The IT community of professionals now has over 15 years experience in
implementing complex systems since Sneller studied MRP. Why are we not
more successful in obtaining results with ERP systems? Has organizational
learning been offset by the increasing complexity of systems implementations?
Future Enterprise Systems.
Brown and Vessey (2003) view ERP as the first wave of a series of
enterprise systems projects to be followed by customer relationship management
(CRM) and supply chain management (SCM). They believe that the lessons
learned in ERP implementations will enable management to better manage risks
of the next wave of enterprise systems. The second wave of ERP is discussed
more fully in the next chapter.
CHAPTER II
REVIEW OF LITERATURE
OVERVIEW
In this chapter the literature relating to the following topics is examined.
The evolution of ERP
The applicability of the functions of management theory to the implementation

of complex systems
Success measurement
While practitioner literature on ERP abounds, academic literature is
sparse. Practitioner literature, while rich in observations and anecdotes,

generally lacks the rigor of empirical research. Where specific ERP literature is
not available, general management information literature is examined.
MRP, MRP II AND ERPAN EVOLUTION

ERP systems evolved from material requirement systems first developed
in the 1960s.
28
29
Figure 11-1 Evolution of ERP Systems
Evolution of ERP S^stems

UUOsI RP1I
lJOs
1 y()s MRP II
]% 0 i hjvuU or^ongo^gdM B gsJ
Adapted from (Rashid, Hossain, & Patrick, 2002).
Material Requirements Planning (MRP)

Computer applications for business were first developed in the mid 1950s.
These first systems were stand-alone applications. The first applications
included payroll processing systems, general ledger systems, accounts payable
systems, and inventory management systems. Each system involved its own
logic, data and users. With these stand-alone systems it was impossible to
coordinate information systems planning across business functions (Davenport,
2000). Business systems were described as islands of automation (McKenny &
McFarlan, 1982). When new systems had something in common with existing
30
systems they were often loosely coupled, usually manually, rather than tightly
integrated (Markus & Tanis, 2000).
Data was often described differently in different functional systems.
Attempts to combine data across various systems were difficult and error-prone.
Material requirement planning systems were first developed in the 1960s
to help manufacturers produce the right part at the right time with a minimum
investment in inventory. Manufacturers had used inventory as a buffer to keep
from running out of product that is needed to meet customer demand. The
combined result of buffers at all levels of production cause inventory investment
to increase dramatically. Not only did this increase in inventory put demands of
the firms cash flow to support the investment, but also made the firms more
vulnerable to write-offs resulting from inventory obsolescence.
APICS, the professional society that has promoted the adoption of MRP
and ERP systems and provided user education, describes MRP as follows.
A set of techniques that uses bill of material data, inventory data, and the
master production schedule to calculate requirements for materials. It makes
recommendations to release replenishment orders for material. Further, because
it is time-phased, it makes recommendations to reschedule open orders when
due dates and needed dates are not in phase. Time-phased MRP begins with
the item s listed on the MPS and de te rm in e s (1) the quantity of all components
and materials required to fabricate those items and (2) the date that the
components and material are required. Time-phased MRP is accomplished by
31
exploding the bill of material, adjusting for inventory quantities on hand or on

order, and offsetting the net requirements by the appropriate lead times (Cox &
Blackstone, 1998).
MRP works backward in time from the planned quantities and due dates
for each end product as specified in the master production schedule. Using the
bills of material to determine the sub-components for each final product, MRP
systems determine planned production order release dates and quantities and
planned material requisition requirements, taking into account existing inventory
on hand and on order, and production orders in process (Sneller, 1986).
The process begins with the production plan expressed in units by product
lines. This plan is based on the overall level of manufacturing output the firm
plans to produce. Once the production plan is approved it is converted into a
master production schedule, which is a more detailed plan.
The master production schedule is based on specific end products and
takes into account the forecast, the production plan, product backlog, inventory
on-hand, material availability, plant capacity, and management policies and
goals.
The master production schedule then becomes input to the capacity
planning module. Both planned orders and orders already released for
production are used in these calculations. This module converts production in
units to production time for each work center required to build the products on the
master production schedule. The output of this process is work center job
32
scheduling reports and purchasing requisitions for materials based on the time
phased production schedule.
Without MRP as a tool to time phase material requirements, materials may
either arrive earlier than needed for production resulting in higher than necessary
inventory levels or later than needed resulting in the inability to deliver the end
product as promised to the customer. A properly operating MRP system
minimizes inventory investment, while improving customer service levels.
A major limitation of MRP systems is that unlimited capacity was
assumed. The planned order release of work orders to the manufacturing floor
did not take into account the capacity limitation of the work center and their
machinery and labor availability.
Manufacturing Resource Planning (MRP II)
MRP II overcame some of the drawbacks of MRP. It provided finite
capacity planning scheduling and shop floor control capability (manufacturing
execution systems). MRP II includes more business functionality than MRP,
dealing with sales, production, inventory, schedules, and cash flows.
(Palaniswamy & Frank, 2000)
APICS describes manufacturing resource planning (MRP II) as follows. A
method for effective planning of all resources of a manufacturing company.
Ideally, it addresses operational planning in units, financial planning in dollars,
and has a simulation capability to answer what-if questions. It is made up of a
variety of functions, each linked together: business planning, sales and
33
operations planning, production planning, master production scheduling, material
requirements planning, capacity requirements planning, and the execution

support systems for capacity and material. Output from these systems is
integrated with financial reports such as the business plan, purchase
commitment report, shipping budget, and inventory projections in dollars.
Manufacturing resource planning is a direct outgrowth and extension of closedloop MRP (Cox & Blackstone, 1998).
Enterprise Resource Planning (ERP) Systems
Changes in the manufacturing environment have made manufacturing
planning and control systems, such as MRP II, less relevant. A move toward
more customization is moving manufacturing from a make to stock environment
to a make to order environment. The basis for competition is shifting from quality
and cost to delivery, lead times, flexibility, greater integration with the customers
and suppliers, and higher levels of product differentiation (Palaniswamy & Frank,
2000). The emergence of standard hardware and software platforms coupled
with standards for business data capture and exchange in the form of enterprise
resource planning (ERP) systems have made powerful and robust business
processes affordable to companies of all sizes (Severance & Passino, 2002).
APICS describes enterprise resource planning systems as follows:
1) A n a cco u n tin g -o rie n te d in form ation system fo r id entifying and planning
the e n te rp rise w id e in form ation needed to take, m ake, ship, and a cco u n t fo r
cu sto m e r orders. A n ER P system differs fro m the typical M R P II system in
34
technical requirements such as graphical user interface, relational database, use
of fourth-generation language, and computer-assisted software engineering tools

in development, client/server architecture, and open-systems portability. 2) More
generally, a method for effective planning and control of all resources needed to
take, make, ship, and account for customer orders in a manufacturing,
distribution, or service company (Cox & Blackstone, 1998).
Donovan describes ERP systems as quantum improvements over the
old, rigid and often illogical MRPII systems. With todays configurable and more
flexible ERP systems theres been a dramatic improvement in both the speed
and ability to conform to logical, customer-oriented business processes. MRP
processes were hard coded with rigid, predefined business processes
embedded in the software that were difficult to adapt to the real business needs.
In contrast many ERP products come pre-packaged with multiple best practice
options that management can choose from. ERP capabilities provide the
visibility and time links needed to manage the entire supply chain (ERP Systems
Promise a Quantum Leap Over MRPII Systems, 1998).
ERP software can result in a significant improvement over MRP and
MRPII in the entire order-to-delivery process. Customers can be served at a
lower cost and more predictability resulting in a competitive advantage to the
firm. Predictability means that the right inventory will be available, at the right
time, to fill customer orders (ERP Systems Promise a Quantum Leap Over MRPII
Systems, 1998). Todays more demanding customers insist on predictability.
35
Technical Factors.
Davenport (2000) identifies several technical factors that distinguish ERP
systems from predecessor systems. These technical factors include modular
construction, client/server architecture, configuration, common central database,
and variable interfaces.
Modular construction. ERP systems are a collection of application
modules representing various business processes. SAP, a leading ERP systems
vendor, includes the following modules in its SAP R/3 software:
Table 11-1
Typical SAP Functions
Financial Accounting
Materials Management
Treasury
Plant Maintenance
Controlling (financial control)
Quality Management
Enterprise Controlling (management
Project Systems (project management)
reporting
Investment Management
Sales and Distribution
Production Planning
Fluman Resource Management
Advanced Planner and Optimizer
Companies can install all modules or only the modules they select. Client
may also substitute modules written by other software firms which fit their
functional needs better than the comparable modules of their main vendor.
Client/server Architecture. In this architecture, a server does some
processing and a desktop personal computer (the client) does the rest. Large
and complex ERP systems may require one server for application programs and
another server for the database.
36
Configuration. ERP systems are based on a standard set of business

processes. Companies installing systems can configure the ERP system to meet
their own business needs. Where the configuration options do not meet the
needs of the company, the company must reengineer its processes to match the
configurations available in the ERP systems.
Common Central Database. A central database, shared by all modules,
is a feature of ERP systems. While this feature is not new, in ERP systems it has
reached the highest level of successful execution.
Variable Interfaces. As global systems, ERP systems include interfaces
that match the different countries in which firms operate. Typical ERP systems
support currencies and local human resource requirements in most industrialized
nations.
ERP II
Recently, the Gartner Group coined the term ERP II to describe a shift in
ERP from an enterprise information base to moving information across the
supply chain. ERP II systems, then, are not just the backbone of the enterprise.
They are also the information link for an enterprise in the supply chain ("Taking
the Pulse of ERP," 2001).
The challenge of ERP II is first to accurately manage information about
enterprise transactions and then to open up the system to trading partners. A
PeopleSoft executive states, Going forward, ERP is all about sharing information
37
and collaboration. ERP is no longer about your business, its about your supply
chain, states a J.D. Edwards executive ("Taking the Pulse of ERP," 2001).
Brian Zrimsek, research director of the Gartner Group, identifies six key
areas of difference between ERP and ERP II ("Taking the Pulse of ERP," 2001).
Role. ERP attempts to optimize the enterprise. ERP II is concerned with
supply chain optimization by collaboration with trading partners.
Domain. ERP focuses on manufacturing and distribution. ERP II will
cross all sectors.
Function. Current ERP systems cross all industry segments and sectors.
ERP II vendors will specialize in deep functionality for specific industries.
Process. Business processes are focused within the four walls of the
organization. ERP II will go beyond the four walls to business trading partners.
Architecture. ERP systems are monolithic and closed. ERP II will be
Web-based, open to integrate and interoperate with other systems.
Data. ERP information is generated and consumed within the enterprise.
ERP II information is available across the supply chain.
Gartner does not expect to see ERP II systems fully deployed before
2005.
OPERATIONAL PLANNING MODEL
Koontz (1980) summarizes classical management theory in his systems
approach to management. Inputs to the Koontz model include human, capital,
management and technology. A managerial transformation process converts
38
these inputs into outputs, such as products, services, profits, satisfaction, and
goal integration. The managerial transformation process consists of planning,
organizing, staffing, leading and controlling. The process is supported by a
communications system, which links the various elements to each other and to
outside stakeholders and the environment (Koontz, O'Donnel, & Weihrich, 1980).
Planning
Koontz describes planning as a function that precedes all other
management functions. Planning identifies the organizations objectives and
describes how the organization will attain these objectives. The other functions,
organizing, staffing, leading and controlling, support the planning function
(Koontz et al., 1980).
The implementation of an ERP system is a massive task involving to some
degree a large part of an organizations employees. For a group effort such as
this to be successful people must know what tasks they are expected to
accomplish and when the tasks need to be completed. Planning is deciding in
advance what to do, how to do it, when to do it and who is to do it. Planning
bridges the gap from where we are to where we want to go (Koontz et al., 1980).
Integration o f Information Systems Planning and Business Planning
Teo and King (1997) investigate the integration between business
planning and in form ation syste m s planning. Inform ation syste m s p lanning is the
process of establishing objectives for organizational computing and identifying

potential applications that the organizations should implement (Teo & King,
39
1997). The linkage of IS plans with organizational objectives has been among
the top problems reported by information systems (IS) managers and business
executives (Reich & Benbasat, 1996). Another research paper cited an A.T.
Kearney study that demonstrated that firms that integrate business plans with
information systems plans outperform those that do not (Das, Zahra, &
Warkentin, 1991). Severance and Passino (2002) state that most executives do
not understand the connection between modern business and technology and
leave technology compartmentalized within the l/T department with disastrous
effects.
King (1978) recognized the importance of business planning (BP) and
information systems planning (ISP) integration, seeing the integration as one
directional only, flowing from business planning to information systems planning
(King, 1978). King and Zmud (1981) later expanded the concept into a two-way
integration (King & Zmud, 1981). Synnott (1987) develop five levels of
integration:
1. No planning: No formal BP or ISP.
2. Stand-alone planning: Presence of either business plan or IS plan but
not both.
3. Reactive planning: IS function reacts to business plans and has no
input in the BP process.
4. Linked planning: BP is interfaced with ISP. Systems resources are

matched against business needs.
40
5. Integrated planning: BP is indistinguishable from ISP. They occur

simultaneously and interactively (Teo & King, 1997).
With the high level of functional integration required in the adoption of
ERP systems it is reasonable to conclude that the higher the level of integration
of BP and ISP, the more likely the project is to succeed.
Organizing
Koontz et al. (1980) defines organizing as the establishment of an
intentional structure of roles through determination of the activities required to
achieve goals of an enterprise and each part of it, the grouping of these activities,
the assignment of such groups of activities to a manager, the delegation of
authority to carry them out, and provision for coordination of authority and
informational relationships horizontally and vertically in the organization
structure. Daft (2000) provides a simpler definition of organizing as the
deployment of organizational resources to achieve strategic goals. Organizing
encompasses such issues as organizational structure, delegation of authority,
and staff versus line functions.
The function of organizing is based in the foundations of management
literature. Organizations arise out of the need for cooperation among people.
Uncertainty in the environment reduces the level of cooperation (Barnard, 1938 &
1968). The adoption of an ERP system would cause uncertainty and thus reduce
cooperation in the organization.
41
Project Management
Common organizational structures are based on functional areas,
geographic areas, divisions, strategic business units or matrix organizations.
Where tasks impact several areas of an organization the use of a project
manager is frequently used to provide lateral coordination.
Full time Project Leader
The Sneller study examined the relationship between a full-time project
leader and project success. At the time of this study, the systems literature was
divided on whether a full time project leader with MRP systems experience was
required. One view is that a user must head up the project team and that it must
be a full time job (Wight, 1974). Another perspective is that, The last thing (a
Project Manager) really needs is some systems knowledge or technical
knowledge. That is probably the least important of the skills needed in a Project
Manager (Flosi, 1980).
Level o f Project Leader
The reporting level and rank of the project manager are important factors
in project success. The project manager needs the authority to make difficult
decisions. Without decision-making authority, groups with vested interests in the
affected process will either proceed very slowly or resist the project entirely. The
project manager, with higher organizational position than personnel in the
affected groups, may be more effective. Cisco Systems overcame organizational
inertia only when its ERP project was led by the CIO and the vice president of
manufacturing, who reported directly to the board of directors (McAfee, 2003).
42
Staffing
Staffing is the management function that fills the roles within an
organization with competent people who can operate the firm now and in the
future. Staffing involves effective recruitment, selection, placement, appraisal,
and development of people to occupy the role in the organizational structures
(Koontz et al., 1980).
Skills of Project Manager
Current literature concerning the role of the project manager is more
concerned with the business skills of the manager, rather than the managers
information skills. Brown and Vessey (2003) found that to increase the likelihood
of success, project leaders must be veterans who have already earned their
stripes leading projects.
Motivation of the project manager to succeed may be an important issue
in ERP implementation. Firms can use either formal or informal reward to
encourage its employees. Formal rewards can be structured to benefit
individuals or groups, can be long term or short term and may include
promotions. Informal rewards can include providing recognition or status for the
successful project leader. The intrinsic satisfaction of the project manger or team
members may also suffice as an informal reward (Maciariello & Kirby, 1994).
T ea m m em bers. T eam m em b ers m ust have deep busin e ss process
knowledge and the power users from functional units on the team-must be
among the best in the business, if not the best. Also team members must be
43
empowered to make decisions for their business units or functions (Brown &
Vessey, 2003).
Training
Lassila and Brancheau found that a positive initial experience for users of
a new software package was important. Further, they found that a tendency to
cut training and associated implementation cost in the adoption of commercial
software packages could result in negative user attitudes and a low-integration
equilibrium. They further found that enhanced training on both the packaged
systems features and related work processes could be important factor in
overcoming this problem. (Lassila & Brancheau, 1999) A study by Gartner
Group indicates that 25% of the ERP budget should be dedicated to training
users. (Coetzer, 2000) A study by Benchmarking Partners found that training
averaged 8 percent of total project cost, but varied from 1 percent to 30 percent.
(Wheatly, 2000)
Kydd (1989) discussed that uncertainty and equivocality are often
responsible for the failure in the development of new management information
systems. (Kydd, 1989) Training is one of the IT tools to overcome both
uncertainty and equivocality.
Training should include the following major items:
Basic manufacturing concepts
> Computer literacy classes
44
> Soft skills classes - problem solving, decision-making, needs

assessment
ERP integration training
Daily functionality classes (Kapp, Latham, & Ford-Latham, 2000)
CIO John Conklin distinguished between training and education.
Education is all the why, who and where issues...Training is the how part of the
equation. Training programs typically concentrate on software-specific issues
giving little attention to business process education. A lack of understanding of
the linkage between such areas as sales order, manufacturing and accounting
can be the source of post implementation problems. The CIO of a manufacturer
states, Everybody knew the keystrokes to do their job, but that was all. They
didnt understand the ERP process, the degree of integration and the importance
of the data being right. (Wheatly, 2000)
A case study of an ERP system in a university demonstrated that user
satisfaction with training quality is related to the users perception of ease of use
of the systems and the efficiency and effectiveness of the system in doing their
jobs (Lee & Bradley, 2004). This study is an empirical test of the Technology
Acceptance Model (TAM). The TAM uses two variables, perceived usefulness
and perceived ease of use, as determinants of user acceptance. The perceived
usefulness is based on the observation that people tend to use or not use the
application to the extent they believe it will help them perform their job better
(Davis, Bagozzi, & Warchaw, 1989). Even if an application is perceived as
45
useful, it will only be used if it is perceived as easy to use, that is benefits of

usage outweigh the effort of using the system. These two determinants result in
users attitudes toward using the system, which in turn leads to the users
behavioral intention to use the system. Lee (2004) demonstrates that training
satisfaction by the ERP user is related to both determinants, perceived
usefulness and ease of use.
The Sneller (1986) study supported the significance to implementation
outcomes of both (a) the level and quality of training and (b) the use of testing in
conjunction with training.
A case study of 12 manufacturing firms found that firms completing
implementation projects on time and on/under-budget developed organizational
change and training strategies in advance of the project and continually updated
them during implementation (Mabert, Soni, & Venkataramanan, 2003).
While many recognize the value and importance of training it typically
occurs at the end of the implementation cycle, when activities are often running
late and being compressed. Seventy-five percent of users polled at a seminar
indicated that next time they would allow more time for training and would tailor
the training around their own business processes (Wheatly, 2000).
Consultants
Consultants are frequently employed during ERP implementation projects.
Davenport (1998) found that industry spends $10 billion per year for consultants
to install ERP systems. Welti (1999), the manager of an implementation project
46
at ALVEO, a European manufacturer states, The success of a project depends
strongly on the capabilities of the consultants because the consultant is the only
one with in-depth knowledge of the software. Hence good consultants have a
major impact on the throughput time and the quality of a project. This same
project manager (Welti, 1999) defined the tasks and responsibilities of the
consultant as follows:
meeting deadlines
consulting, supporting, and training project group
creating, monitoring, and verifying implementation schedule
solving problems with specialists from SAP and the consulting company
configuring and customizing the system
providing quality assurance of the features implemented
documenting all activities
Despite the spending by industry and the experience of one practitioner

described above, Sneller (1986) found no significant relationship between the
use of consultants and implementation project success in MRP projects.
The dilemma management faces with respect to consultants is described
below.
On one hand organizations want to reduce the engagement of costly
consultants, but on the other hand hardly any organization has the internal
know le dge and skills to im p le m e n t an E R P system su cce ssfu lly w ith o u t external
help. Choosing the right consultants and using their skills and knowledge
appropriately, as well as transferring and retaining essential knowledge within the
47
organization becomes essential to the overall success of an ERP system

implementation (Haines & Goodhue, 2000).
Leading
Daft (2000) defines leadership as the ability to influence people toward
the attainment of goals.
Executive Support
Few nostrums have been prescribed so religiously and ignored as
regularly as executive support in the development and
implementation of management information systems (MIS)
(Jarvenpaa & Ives, 1991).
Executive support has generally been regarded as critical to the
development and implementation of management information systems. As early
as 1968 Rockwell observed a good MIS must begin at the top with the chief
executive officer. In 1985 Doll warned that, information systems are just too
important to leave development in the hands of technician (Jarvenpaa & Ives,
1991).
Kotter (1990) describes the role of the leader as coping with change,
setting a direction for the organization and developing a vision of the future.
Major changes are more and more necessary to survive and compete effectively
in this new environment. More change always demands more leadership (Kotter,
1990). Much of the leaders work is accomplished by informal relationships,
aligning people to create a coalition committed to the vision.
The terms executive participation and executive involvement can
describe executive support. Involvement describes a psychological state.
48
Participation refers to the behaviors and activities performed. (Jarvenpaa &

Ives, 1991)
McKersie and Walton (1991) describe the role of top management in
information technology as including the following:
Set policy regarding where to introduce information technology and how to

establish priorities for competing projects,
Develop understanding of the capabilities and limitations of IT,
Establish reasonable goals for IT systems,
Exhibit a strong commitment to the successful introduction of IT,
Communicate the corporate IT strategy to all employees (McKersie & Walton,

1991).
Laughlin posits the senior team must be involved in communicating
business direction, allocating full-time and part-time resources, delaying

initiatives that may create contention with implementation of the ERP application,
and dealing with organizational resistance (Laughlin, 1999).
A case study of 12 manufacturing firms found a common characteristic of
ERP project that finished on time and on/under-budget was the involvement of
senior executives who also established clear priorities (Mabert et al., 2003). A
survey of manufacturers by the same authors confirmed that the planning of
education and training programs are two of the significant individual planning
variables common to successful implementations.
Champions
Throughout literature on strategic uses of information technology is the
idea of a champion for critical new systems. Champions are described as more
than ordinary leaders; they are more like transformation leaders who inspire
49
others to transcend self-interest for a higher collective purpose (Burns, 1978).

IT champions may be important to the implementation of information systems as
a result of their ability to bring about organizational change. These managers
vigorously promote their vision of IT and overcome hurdles in the authorization
and implementation phases. Successful champions can break down
bureaucratic barriers and drive change through the organization while the firms
competitors deliberate over the feasibility of an idea. Sponsors have the funds
and authority to accomplish their goals, but champions, in spite of having less
than the requisite authority or resources, bring about change in their
organizations by using a variety of other influence processes (Beath, 1991).
In a different context of change, Drucker (1999) remarks about
champions, find somebody within the enterprise who really wants to new. As
said before, everything new gets into trouble. And then it needs a champion. It
needs somebody who says: I am going to make this succeed, and who goes to
work on it. And this person needs to be somebody the organization respects.
This need not even be somebody within the organization (Drucker, 1999).
Brown and Vessey (2003) found that top management engagement
includes serving as committed sponsors and champions of the projects.
Change Management
ERP implementations involve change in almost every area of business
processes. Vendors include several options for configuring ERP systems based
on best practices, but it is unlikely that all users will be using these options.
50
Implementation inevitably causes major changes in an adopting organization,

resulting in resistance, confusion, redundancies and errors (Somers et al.,
2001). Appleton estimates half of the ERP implementation failures occur
because companies significantly underestimate the efforts involved in change
management (Appleton, 1997). The founder of a change management firm
states that, In fact, at least half the issues in ERP disasters are not technical but
people related and culture related...the soft stuff is really the hard stuff (Wheatly,
2000 ).
McAfee (2003) describes inertia and resistance as two major pitfalls in the
implementation of complex systems, such as ERP. He defines inertia as lack of
progress over time on implementation milestones and decisions, even after all
parties have agreed that the effort is a good idea. Factors contributing to inertia
are the introduction of many new processes at once and the complexity of the
processes being automated. Both of these factors are characteristic of ERP
implementations.
Resistance occurs when users are not in agreement about how or whether
a project should proceed. Resistance arises when new business processes
required by the project are a large departure from the current way of doing
things. Resistance also can result from misalignment of incentives. A
m an u fa ctu rin g m a n a g e r w h o se e va luatio n d e p e n d s on m eeting produ ction
targets may well oppose a large project that has the potential to disrupt output
temporarily (McAfee, 2002).
51
Brown and Vessey (2003) found that change management planning must
go hand in hand with project planning. Change management must be rigorously

planned and generously resourced...Bringing about such extensive changes
requires sharing the vision, gaining upfront buy-in, communicating often (and to
everyone affected), and providing training on the new systems and business
processes, via well-placed training programs.
Controlling
Koontz (1980) defines controlling as the managerial function of
measuring and correcting performance of activities of subordinates in order to
assure that enterprise objectives and plans are being accomplished. Daft (2000)
defines organizational control as the systematic process of regulating
organizational activities to make them consistent with the expectations
established in plans, targets, and standards of performance.
Management steering committees for information systems implementation
projects have been a common method of control. These committees can be
viewed as a method to get top management involved, ensure IS/BP planning fit,
improve communication and change user attitudes toward IS. A typical steering
committee includes the senior business unit manager, however, the
membership, chairmanship, reporting level, procedure, and frequency of
meeting may differ (Gupta & Raghunathan, 1989). In examining the impact of
steering committees on information systems planning efforts in organizations,
Gupta and Raghunathan (1989) found that IS steering committees have a high
52
to medium impact on the majority of IS planning factors. The impact was high in
industries such as mining, wholesale trade and financial institutions and low in
manufacturing and construction. This study also found steering committees have
a significant impact on hardware integration, achievement of planned goals,
integration of IS into business, and coordination of planning activities. The
impact was much less for resource limitations for implementation, software
systems integration, and the level of project planning details. (Gupta &
Raghunathan, 1989)
A study of 12 manufacturing firms found that steering committees with
executive leadership were one of the characteristics of companies that stayed
on-time and on/under-budget with their implementation projects. (Mabert et al.,
2003)
In his study of MRP systems implementation, Sneller found that a steering
committee chaired by the senior business unit manager is positively related to
implementation outcomes. The study also found that steering committees that
meet at least every four weeks are positively related to implementation
outcomes. The use of a formal tracking system by these committees was not
supported. (Sneller, 1986)
Welti (1999) views a capable and powerful steering committee as
absolutely crucial for a project. He describes the duties of the steering
committee as follows:
Assuming project ownership
53
Monitoring project targets
Managing the implementation of project policy
Controlling project planning and progress
Enabling fast decisions
Deciding on organizational issues
Making resources available
Supporting the project manager
Motivating the management
Approving proposals from the project team"
The ALVEO implementation project originally staffed its steering

committee with middle management. The committee was unable to make
decisions on organizational matters, program changes or human resources.
With this organizational structure, top management was reluctant to intervene, as
they had no direct stake in the project itself. After struggling with this steering
committee for over a year, ALVEO restaffed the committee with top management
resulting in a committee that assumed ownership of the project and gained
appreciation of its importance to the organization. (Welti, 1999)
SUCCESS MEASUREMENT
Peter Keen posed five issues at the first meeting of the International
Conference of Information Systems in 1980 that needed to be resolved to
establish coherent research in the field of information science. The issue
important to this study was What is the dependent variable? (William H.
DeLone & McLean, 1992) How do we measure success in the information
sciences?
54
DeLone and McLean reviewed 180 articles published between 1981 and
1987 and developed a taxonomy and model based on six dimensions of I/S
success - systems quality, information quality, use, user satisfaction, individual
impact and organizational impact.
Systems Quality. The systems quality dimension includes measures of
performance such as reliability, response rate, error rate and ease of use.
Information Quality. The information quality dimension measures the
perceived usefulness and importance of systems output, usually in the form of
reports.
Use. One of the most frequently used dimensions is use, describing the
use of information by managers.
User Satisfaction. User satisfaction is another frequently used dimension
although it raises the question of whose satisfaction should be measured. A
more recent study supports the case that user satisfaction is made up of five
variables: content, accuracy, format, ease of use and timeliness. (Doll, Xia, &
Torkzadeh, 1994)
Individual Impact. Individual impact describes the effect of information on
the behavior of the recipient is one of the most difficult dimensions to measure.
Organizational Impact. The final dimension is organizational impact or the
effect of information on organizational performance. The difficulty with
measuring organizational performance is isolating the effects of the information
55
systems effort from other influences on organizational performance. (William H.
DeLone & McLean, 1992)

Hedman and Borell (2003) used the competing values model to examine
how ERP systems affect organizational effectiveness. This model describes
competing values in organizations in two dimensions, internal focus versus
external focus, and stable structure versus flexible structure. The result is four
interrelated models. (Quinn & Rohrbaugh, 1983)
The human relations (HR) model has flexible structure and internal focus.
This internal flexibility is used to build employee cohesion and morale. The open
systems (OS) model is based on external flexibility. Organizational growth is
gained by readiness and flexibility. The internal process (IP) model focuses on
internal stability and uses management, information processing, and
communications to develop stability and control. The rational goals (RG) model
focuses on external control and relies on planning and goal setting to gain
productivity. (Hedman & Borell, 2003)
Hedman and Borell (2003) concluded that ERP systems strengths relate
to the IP and RG models while ERP shortcomings are in the area of the HR and
OS models.
DeLone and McLean develop a model, shown in Figure X, to reflect the
interdependent, process nature of I/S success. Rather than six independent
success categories, there are six /'nferdependent dimensions of I/S success.
(William H. DeLone & McLean, 1992)
56
Figure 11-1. Information Systems Success Model

System
Quality
Use
Individual
Impact
Information
Quality
Organizational
Impact
User
Satisfaction
From DeLone, W.H. and McLean, E.R. (1992). Information systems success: The quest for the
dependent variable, Information Systems Research, 3, 1, pp. 60-95.
DeLone and McLean caution that a researcher cannot arbitrarily select

variables from each of these constructs to develop an overall I/S success
measurement. The selection of success measures should also consider the
contingency variables, such as the independent variables being researched; the
organizational strategy, structure, size and environment of the organizations
being studied; the technology being employed; and the task and individual
characteristics of the system under investigation (Weill and Olson, 1989).
(William H. DeLone & McLean, 1992)
The DeLone and McLean model has proved very popular among IS
researchers. In the period 1993 through mid-2002, 285 refereed papers in
journals and proceedings referenced the model (W.H. DeLone & McLean,
2003). DeLone and McLean cite two studies, Seddon and Kiew, Rai et al., which
empirically tested and validated the model and many others that have implicitly
tested the model.
Markus and Tanis (2000) identify several problems in measuring success.
They observe a lack of consensus and clarity about the meaning of success
57
where information systems are concerned. Success can be viewed in terms of
the implementation project, i.e., on time, on budget, or in terms of the business

results. Success can also be view from different point of time, and from different
points of view.
Markus and Tanis divide ERP systems implementation into four phases:
the chartering phase that includes
> The Chartering Phase
Building the business justification for the project
Selecting the software package to be used
Identifying the project manager
Approval of budget and schedule
> The Project Phase
Software configuration
Systems integration
Testing
Data conversion
Training
Rollout
> The Shakedown Phase
Bug fixing and rework
System performance and tuning
Retraining
Staffing up to handle temporary inefficiencies
> The Onward & Upward Phase
C o n tin u o u s b usiness im p ro ve m e n t
Additional user skill building

Post implementation benefit assessment
58
A project may be terminated at any of these phases. Unresolved

problems at any of these phases may be carried on the subsequent phases
resulting in problems.
The DeLone and McLean six dimensional model of success will be used
for this study. While the Markus and Tanis model may provide more insight into
the implementation process success measures, the objective of this study is to
assess the critical success factors from the perspective of overall business
success. Measuring the success of the project in terms of on-time, on-budget
performance separate from the overall project success maybe comparable to
concluding that the operation was a success but the patient died. This study is
concerned with the overall business success of the ERP implementation project,
but also captures and analyzes on-time and on/under budget project completion
information.
CHAPTER III
RESEARCH QUESTION FRAMEWORK AND METHODS
Management Information Systems (MIS) research involves the
systematic investigation of the management, development,
operation, use and impact of computer-based organizational
information systems. As with all investigations of organizational
phenomena, MIS research can be, should be, and is addressed via
many paradigms (Morgan, 1986) and multiple research strategies
(McGrath, 1982). (Zmud & Boynton, 1991)
This study is based on the premise that a classical management model,
such as the Operational Management model presented by Koontz, ODonnell,
and Weihrich (1980), can be used to evaluate ERP implementation projects. The
durability of the Koontz model is shown by the use of a substantially identical
model in a more current management text, such as Daft (2000). The Koontz
model uses five broad functional areas of management: planning, organizing,
staffing, leading and controlling. The Daft model uses four areas, including
staffing functions under organizing and leadership. (See Chapter 2, Operational
Planning Model, for a more complete discussion of the Koontz and Daft models.)
Based on the review of the literature in Chapter II, this chapter identifies
specific hypotheses for testing the individual functions of managers: planning,
organizing, staffing, leading and controlling. Where feasible, the hypotheses
developed by Sneller for testing MRP systems implementation are used. In
areas where the expanded functionality of ERP systems requires or where new
issues are addressed in the literature, new hypotheses are added or substituted.
59
60
Two methods will be used to test these hypotheses:
Case studies - Case studies of eight companies were performed using

various methods including in person interviews, e-mail interviews using openended questions, action research and archival data.
A questionnaire
Hypotheses to be examined in this research are defined below. A
description of the questionnaire follows the definition of hypotheses. The

questionnaire itself is included as Appendix I.
Planning
Hypothesis I
The level of integration of IS planning and business planning is positively
related to implementation project success.
Variables to be examined for this hypothesis are:
Status in the organization of business planning and IT planning

integration
The degree of sharing a common vision of the role and contribution of

IT between business executives and IT executives
Business executives understanding of current IT objectives
IS executives understanding of business objectives
Organizing
Hypothesis II
Organizing the ERP implementation project under the direction of a project
manager whose sole responsibilities are project implementation is positively
related to implementation project success.
Variables to be examined for this analysis are:Assignment of specific
project manager.
Percentage of Project Managers time dedicated to implementation project

during each phase of the project (Markus and Tanis, 2000, see Chapter II):
Chartering Phase
Project Phase
Shakedown Phase
Onward and Upward Phase
Hypothesis III
An organizational structure in which the Project Manager reports directly
to the business units senior manager is positively related to project success.
Variables to be examined for this analysis are:
Level of management to which the Project Manager reports.
Degree of project support given by business units senior manager.
Staffing
Hypothesis IV
Staffing the project manager position with an individual with extensive
experience is positively related to implementation project success.
62
Variables used in this analysis are:
Level of previous ERP systems experience.
Level of project management experience.
How was the project manager motivated to succeed?
Hypothesis V
A. The quantity and quality of training is positively related to
implementation project success.
B. The use of testing, together with training, is positively related to
The variables to be used for this analysis are:
Percentage of project costs used for training.
Quality of training during system implementation.
Percentage of total training hours spent on business process

integration issues.
Use of testing to verify adequacy of training.
Hypothesis VI
Use of an ERP consultant for guidance in the system implementation
process is positively related to implementation project success.
Variables to be examined for this analysis are:
Use of a consultant during ERP system implementation.
Percentage of time consultant was available during implementation.
Use of consultant
63
For training,
For project direction, or
For organizational change.
Use of consultant as Project Manager.
Leading
Hypothesis VII
CEO involvement in the planning and implementation of ERP systems is
positively related to implementation project success.
Variables used in this analysis are:
Level of senior management involvement in the implementation

process.
Type of support provided by senior management-participation or

involvement.
Hypothesis VIII
The existence of a champion is positively related to implementation project
success.
Variables used to analyze this hypothesis are:
Existence of a champion for implementation
Organizational level of champion
Effectiveness of champion
64
Hypothesis IX
Managements effectiveness in reducing user resistance to change is
Perceived effectiveness of management in reducing user resistance.
Controlling
Hypothesis X
The use of a steering committee that:
a) Is headed by the CEO and
b) Meets at least every four weeks
Is positively related to implementation project success.
Use of a steering committee to review the planning and implementation

of the project.
Level of chairman of steering committee

Frequency of project review by senior management
Monitoring of project costs
If a steering committee was not used, was any other control
mechanism outside the project team used
METHODS
CASE STUDIES
A multiple case study design is used in this study.
65
Eight companies that installed ERP systems at least two years ago were
selected for semi-structured interviews. The purpose of these interviews is to

obtain detailed information on the implementation process at the company and
the success or failure of the projects.
The implementations are identified as successful or unsuccessful.
Interviews were conducted with functional managers involved in the systems
implementation for the firms.
Interviews lasted between 30 and 90 minutes when conducted in person.
Other interviews were conducted by e-mail. Interview subjects were generally
presented in advance of the interview with an outline of the topics the interviewer
wished to cover. Discussion subjects were based on the hypotheses defined
above and background information. Subjects were asked to assess key
successes and failures in the project. Subjects were also asked what they would
do differently if they started the project again today. Based on the notes taken by
the interviewer, a detailed summary of the interview was written and is presented
in Chapter IV. Where possible the interviews were supplemented by archival
data.
Questionnaire
Data Collection
Manufacturing companies were surveyed with a mail questionnaire.
These firms were selected from the Harris Manufacturing Database, 2003.
Manufacturing firms with sales in excess of $500 million were selected for the
66
sample because this group represents firms targeted by ERP vendors. The
manufacturing sector represents the largest single user of ERP systems
accounting for $6.8 billion in 1996 ERP systems sales out of total sales that year
of $8.7 billion. (Somers et al., 2001)
Harris provided a list of 1,995 firms with primary SIC codes indicating the
firms were classified as manufacturers. SPSS 11.0 was used to randomly select
the 1,500 firms included in the sample.
Pilot Study. A pilot study was used to test the questionnaire before it was
distributed. The objective of the pilot study was to ensure that respondents
would be able to answer the questions without confusion. Faculty members at
Central Washington University were used for the pilot study.
Follow-up on non-replies. Non-replies were sent second requests
and in some case a third request. Telephone calls were made to many
companies to verify addresses and names in an attempt to improve the response
rate.
The questionnaire is constructed around the five functional areas of
management. The Sneller survey questionnaire consisted of 50 questions. A
sample of the Sneller questionnaire is shown in Appendix II. Sneller grouped his
questions under the titles Background, Planning, Organizing, Staffing, Leading,
and Controlling. This study utilizes the same groupings, but will add a
demographic section not used in the earlier study. The current study
questionnaire is shown in Appendix VI.
67
Part 2 has been added to the questionnaire to make use of questionnaires
that have been directed to firms that have not implemented an ERP system. This
section asks if an ERP system has been considered and was rejected or if an
implementation is currently in progress. If ERP was considered but not adopted
the reasons for non-adoption are explored.
Background
The first ten questions, which Sneller described as Background, were his
success measures. Sneller used a two dimensional model of success consisting
of improved performance and user satisfaction. The first question asked the
subject to describe the overall MRP implementation as successful or
unsuccessful. The next five questions, no. 2 through no. 6, asked for changes in
performance metrics, specifically:
Inventory turnover,
On-time deliveries,
Delivery lead times,
Material shortages and
Number of material expediters.
Questions 7 through 10 dealt with user satisfaction as a measure of

success.
S ince the cu rre n t stu d y uses a six d im e n sio n a l m odel, som e backg ro und
questions were revised. The questions were structured to capture information on

the six dimensions of success. Where it was possible Snellers questions were
68
retained. In other areas, new questions were added or Snellers questions were
modified.
For example, Sneller asked if management considered the the MRP
system has a positive rate of return? The questionnaire for this research asks
1.) whether the overall firm performance as measured by operating profit has
improved and 2.) does management consider the ERP system worth the
investment?
Systems quality. This dimension required the addition of a question
concerning the reliability and ease of use of the implemented system.
Information quality. This dimension required a question on the usefulness
of systems reports.
User satisfaction. This dimension required a question relating to user
satisfaction.
Use. This dimension of the model is of limited use for ERP systems since
users have no choice with regard to use of the system. But the behavioral
attitude toward use will impact user resistance and user satisfaction.
Individual impact. This dimension required the addition of a question
dealing with individual user impact.
Organizational impact. This dimension is closely equivalent to the
performance measures used by Sneller.
Question 1 was retained from the Sneller study requesting the respondent
to subjectively classify the implementation being described as successful or
69
unsuccessful. Questions 2 through 4 were also retained. These questions ask

the respondent to indicate how some organizational performance metrics
changed following the ERP implementation. These questions look for
improvements in inventory turnover rates, on-time deliveries, and delivery lead
times. These questions measure the success dimension of organizational
impact.
Question 5 asks the respondent to rate systems performance in terms of
improved reliability, faster response rate, lower error rates and improved ease of
use. This question measures systems quality.
Question 6 requests the respondent to comment on the overall quality of
reports produced by the ERP system compared with reports from the legacy
systems. Question 7 asks the respondent to rate the timeliness and accuracy of
financial reports produced by the ERP systems compare to those produced by
legacy systems. These questions measure information quality.
Question 8 asks the respondent to rate the use of ERP system reports
and other information provided by the system compared with the use of legacy
systems reports. This question measures the dimension of use.
Question 9 asks the respondent to rate the perceived user satisfaction
observed in users compared with legacy systems. These question measures
perceived user satisfaction.
Question 10 asks the respondent to rate how organizational performance,
measured by operating profit changed since implementing the ERP system. This
70
question will be used to measure the dimension of organizational impact along

with question 2, 3, and 4.
Questions 5, 6 and 8 will be used to measure the dimension of individual
impact.
Question 11 asks if management considers the implementation project to
be worth the investment. This question is less specific than Snellers question on
a positive return on investment, but due to the complexity of ERP systems the
calculation of a ROI is somewhat problematical.
Planning
The Sneller questionnaire included nine questions labeled Planning which
related to user participation, advance planning, systems implementation plans,
use of a standardized implementation plan, budgeting, training, and testing.
In the current questionnaire Snellers questions regarding user
participation, advance planning and systems implementation were replaced with
four questions relating to the level of integration between business planning and
IT planning. Snellers questions regarding training and testing were retained but
moved to the staffing function of management.
Organizing
The organizing section included eight questions, two of which are numeric
questions, rather than scales. These questions deal with
The establishment of a project manager,
The amount of time the project manager is able to allocate to the project,
The degree of authority give to the project manager,
71
The importance of the project in relation to other business objectives,
The reporting level of the project manager
The existence of a matrix structure
The allocation of project members and managers time.
And, the degree of support given the project manager by the units senior
manager.
Staffing
The staffing section consists of six questions relating to the background of
the Project Manager and the utilization of consultants. Supporting questions deal
with the experience and motivation of the project manager and the specific role
filled by consultants. Questions in the area of training and testing have been
transferred to the staffing section from placement in the planning section in the
Sneller study. Numeric questions ask about the percentage of time a consultant
was used during implementation and the percentage of the total project budget
that was spent on training.
Leading
The leading section consists of six questions concerning top management
involvement, user resistance and the existence of a champion.
The first question asks about the perceived level of involvement by the
senior business unit executive. Several questions deal with user resistance
including the level of such resistance, managements awareness of resistance
during implementation and managements effectiveness in dealing with such
resistance.
72
Controlling
The controlling section consists of four questions concerning the review of
the project by the senior business manager, the use of a steering committee, the
organizational level of head of the steering committee, and the monitoring of
project costs.
Demographic information
This section asks the respondent about prior systems implementation by
the organization, products manufactured or industry, type of manufacturing, and
size of company.
CHAPTER IV
CASE STUDIES
INTRODUCTION
A multiple case study approach is used in this research in addition to the
questionnaire described in Chapter III. The conceptual framework used in the
case studies is the same as in the survey, the Operational Planning Model
(Koontz, 1980) described in Chapter II.
Eight sites were selected for the case studies. Table IV-1 summarizes the
case study sites. The ERP implementation projects began in 1990 in the earliest
case and 2001 in the most recent case. Company size varied from $11 million to
$12.5 billion. The companies operate in a variety of industries including
aerospace, transportation, oil and gas supplies and building products.
An open-ended list of questions, shown in Appendix V, was used to begin
discussions with employees and managers interviewed by the researcher. Some
of the interviews were conducted in person and others were conducted by e-mail.
The cases are presented in this chapter in chronological order of the dates of
each companys ERP project, beginning with the earliest implementation project
start date. The first case study site, Pacific Clay Products, Inc., involves an
implementation early in the development of ERP. The company is a mid-sized
73
74
division of a $1 billion holding company. The project was initiated in 1990. The
term ERP was not used in connection with the project, but the functionality of the
software matched that of SAP discussed in Chapter 1 and met all the criteria for
ERP described by Davenport (2002) except the client server architecture, which
was introduced shortly after the project was completed. Methodology for this first
site is action research (Stringer, 1999), since the researcher was the project
manager and controller for the second implementation attempt of the project.
The second site was also an early adopter of ERP. Smith International is
a provider of products and services to the oil and gas industry. The firms two
major divisions, Smith Bits and Smith Services, began their ERP implementation
project in 1993. The site is one of Oracles earliest ERP installations.
The third site is M-l, LLC, a drilling fluids manufacturer, serves the oil
exploration and drilling industry. Smith International holds a majority ownership
of the company. M-l began its ERP project, called Transformation 2000, in 1995,
with Year 2000 problems as the catalyst for the project. The interviews were
supplemented by substantial archival data in the form of employee and
management presentations on the project and project status reports prepared by
the consultants and provided by the firm.
The fourth case study site is Pacific Aerospace and Electronics based in
Wenatchee, WA. PA&E is a mid-sized aerospace and electronics supplier.
Case 5 is the Aerospace and Design Division of Northrop Grumman
Corporation. The division was part of Litton Industries, Inc. during the ERP
75
implementation project in 1996. In 2001 Northrop Grumman purchased Litton

Industries, Inc. This project is unique among the cases since it utilized a Best of
Breed approach, selecting several ERP systems vendors.
The sixth case study site is Halliburton Company, a major international
energy services company. Halliburton embarked on a major SAP implementation
in 1997. The project was the largest SAP implementation at the time of its
completion.
The seventh case is a subsidiary of PACCAR, Inc., an international truck
manufacturer headquartered in Bellevue, WA. The parent company abandoned
its ERP implementation but subsidiaries in England and Mexico have up and
running systems. The subsidiary in Mexicali, Mexico is the site for this case
study.
The final case is a division of Northrop Grumman Corporation, a major
defense contractor. This case is a follow up on Case 5.
76
Table IV-1
SUMMARY OF CASE STUDY SITE CHARACTERISTICS
Case 1
Case 2
Case 3
Case 4
Case 5
Case 6
Case 7
Case 8
Company
Name
Pacific Clay
Products,
Inc.
Smith
International
Divisions
M-l Drilling
1993
1995
1997
Kenworth
Mexicana,
S.A. de C.V.
(Kenmex)
1998
Northrop /
Grumman
Corp.
1990
Litton /
Northrop
Grumman
Corp.
1996
Halliburton
Project
Beginning
Date
Software
Vendor
Pacific
Aerospace
&
Electronics
1995
qad, inc
Oracle
Oracle/
Datalogix
ESI
SAP
Baan
Revenue
$30 million
$1 billion
$11 million
$12.6 billion
$500 million
Best of
Breed for
Industry a.)
$600 million
Project
Cost
$100,000
<$500
million
Not provided
Best of
Breed for
Industry a.)
$600 million
$7 million
US only
Not provided
$15.7 million
$325 million
Not provided
Not provided
e-mail and
phone
e-mail
Interviews
e-mail
Interviews
Interviews
Interviews
Action
and archival
research
data
and archival
a.) WDS (now Manugistics) for manufacturing and procurement, Oracle for financials, TIP QA
for quality assurance, PeopleSoft for HR/Payroll, Matrix One for product data management.
Data
Source
2001
77
Case 1
Pacific Clay Products, Inc.
The Company
Pacific Clay Products, Inc. (PCP) is a privately owned manufacturing
company founded in 1886 and located in southern California. The company
consisted of two manufacturing divisions during the period 1990-1995 when the
ERP system was considered, selected and implemented. Each division had its
own manufacturing facilities and own management structure, but the divisions
shared certain key business functions, including accounting, data processing,
personnel, clay mining and research.
The pipe division manufactured clay sewer pipe in diameters from 4 to 42
inches. The brick division manufactured a wide variety of clay brick products.
Together, the two plants employed about 300 people with combined annual sales
of about $30 million. The pipe division business was sold to a competitor in 1997
due to weak market conditions and the plant was closed shortly thereafter. The
brick division is still a major factor in its industry with sales exceeding $27 million
in 2001. The division manufactures bricks in a wide range of shapes, sized and
colors for residential and architectural use. The brick division also manufactures
pavers and pottery.
The Project
In mid-1990, the PCP controller convinced the companys management to
embark upon the purchase and installation of an integrated accounting and
manufacturing system to replace aging and hard to maintain legacy systems.
78
These legacy systems lacked integration, were programmed primarily in RPG

and were running on an IBM System 3, which the manufacturer was no longer
supporting.
In the legacy systems, each functional area would record its data on
forms, submit it to the data processing department for key entry, and receive
back the necessary reports. Reports were custom designed for the users. As
the new implementation proceeded, management found that some of these
legacy system reports were not accurate.
In the proposed ERP system, end users would directly enter data, be
responsible for data base maintenance, and generate their own reports. The
capital expenditure request describes the project as:
In order to advance the state of information quality and to
streamline the operation of both the Pipe and Brick divisions, we
are proposing to convert to an on-line, fully integrated, relatively
real-time system of business control systems. This system should
allow us to both improve the quality and timeliness of information
and allow us to reduce the clerical effort necessary to support the
organization at any foreseeable level of operations.
Essentially, the system configurations will put a computer
terminal in front of all individuals in the company who either need
significant access to current information regarding the status of the
business or are involved in the input and maintenance of the
information. It will eliminate the need for batch processing of data
by both users and data processing. It will significantly reduce the
number of printed reports distributed throughout the organization
(Pacific Clay Products Inc., 1990).
The Decision.
The controller selected the package used by Pacific Clay based on price
and on the earlier selection of this vendor software by a sister operation owned
79
by the same parent company. No system users participated in the selection

process or were even aware to the concept of ERP or of distributing data
processing to the user departments until implementation began. Neither
management nor future users were aware that business processes would need
to change to accommodate the new system until implementation was underway.
In a company that is over 100 years old with many longtime employees, this
approach contributed to heavy user resistance to change. For example, the
company had relied heavily on tonnage performance measures as a key
indicator of sales, production and inventory. The new system did not provide
tonnage information.
The ERP system selected was MFG/PRO by qad, inc. PCP purchased
the financial and manufacturing modules consisting of general ledger, billing,
accounts receivable, purchasing, accounts payable, cash disbursements, payroll,
inventory, production planning, manufacturing requirements planning, bills of
materials, and routings. The project proposed to replace existing legacy systems
in the area of accounting, including payroll, inventory, order entry, accounts
receivable, accounts payable and general ledger. The ERP project would also
expand systems in the manufacturing area by adding material requirements
planning, master scheduling, production reporting, etc.
As a result of the lack of participation by users and management in the
selection process, members of management each had a different view of what
the system would and would not do. One division president described how the
80
system would track machine maintenance, while in fact that package had not
been purchased or even quoted.
The project was sold to management based on achieving the following
results:
A. Improve the accuracy and timeliness of management information;
B. Reduce the reliance upon printed information hence focusing management on
current, on-line data; and,
C. Reduce manpower requirements and standardize functions to allow easier
transitions when manpower turnover occurs.
First Attempt and Failure

In January 1991 the first attempt to install the system failed. Sales order
processing, accounts receivable, and inventory were the first applications
implemented. The major flaw with this attempt was that the design failed to
enable separate financial and operational reporting for the two operating
divisions of PCP. The information from both operations was commingled with no
ability to create separate reports for each operation. With each division treated
as a separate profit center, with its own management and performance targets,
this outcome was not satisfactory, either at the division level or by the corporate
parent. The implementation was temporarily abandoned and the company
continued to use the legacy systems.
Problems encountered in the initial implementation attempt included:
81
Inadequate initial design,
Inadequate training,
Inadequate staffing and
Resistance to change by employees to the distributing of data entry

functions to the user department.
Employees regularly complained about data entry and maintenance as

doing accountings work.
Successful Implementation Attempt
In July 1991, a second attempt was lead by a new controller to install
these modules. Sales order processing, invoicing and accounts receivable were
implemented successfully. In October 1991, Arthur Andersen & Co. was hired to
assist in the implementation of the remaining accounting modules: general
ledger, accounts payable and payroll by the new fiscal year beginning January
1992. The inventory module was fully implemented following a November 1991
physical inventory.
CRITICAL SUCCESS FACTOR HYPOTHESES

We now will examine the potential critical success factors hypothesized in
Chapter III.
Planning.
H-l. Integration of business planning and IT planning.
Planning for the ERP project was not integrated with the business plan at
PCP. The project was viewed as an accounting department effort and the results
82
were expected to occur within the accounting department. Potential benefits of
the ERP system, other than replacing the legacy accounting systems, were not
even considered. Little thought was given to the effect or capabilities of the new
system outside of accounting. Manufacturing at both divisions resisted any
changes in their business processes to accommodate the ERP system.
Organizing
H-ll. Full time project manager.
In neither phase of the implementation was the project manager, the
controller, fully dedicated to the project. In the first attempt, the controller did
devote the majority of his time to the implementation, at the expense of being
fired for neglecting the normal accounting duties such as timely and accurate
monthly financial statement closings and management of annual audit, and other
accounting and financial functions for which the controller position was
responsible. In the second attempt, the controller devoted about one third of his
time to the project. The company obtained outside help for the implementation
project from consultants and was able to complete the implementation while the
controller was able to keep up with other accounting responsibilities. With
adequate consulting support and a realistic implementation timetable, the lack of
a full-time project manager was not detrimental to the project.
H-lll. Reporting level of project manager.
83
The project manager reported to both division presidents/general

managers. This reporting relationship was the same reporting relationship as the
project manager reported to in his normal job as controller.
Reporting to two division presidents caused a unique set of problems
because of intense rivalry between the two presidents often left the controller in
the middle of unresolved conflicts.
Staffing.
H-IV. Experience of project managers.
The project managers (i.e., controllers) for both phases of the project each
had extensive experience in business, but each was new to PCP at the time of
the project and knew little of the culture or unique business aspects of the over
100-year-old company. Both controllers at PCP brought to their jobs prior project
management experience in accounting systems and/or MRP implementations.
Because ERP software was still in its infancy, neither project manager had
experience with ERP systems.
No special incentives were provided for successful completion of the
project. The firing of the first controller sent a definite message to the second
controller about the importance of both continuing to manage the normal duties
of the controller position and succeeding in this project. The first controller failed
at both.
H-V. Training.
84
On the second implementation attempt, consultants from the software

vendor provided limited business process training to implementation team
members lasting about 2 to 3 hours. The training session explained the business
processes embedded in the software but did not focus on the changes needed at
PCP to implement the software.
The project manager received limited training from the software vendor
and in turn trained his team. Subsequently, most staff training was done one-onone by accounting personnel or the consultants and centered on learning data
entry procedures for the new system, not on business processes. Testing was
not used in conjunction with training.
H-VI. Use of consultants.
The first attempt at implementation of the project was conducted as a oneman show by the controller. After its failure, the new controller realized the time
deadlines would not be met without external help. Consultants from Arthur
Andersen & Co. (AA&Co.) were used to insure meeting project implementation
dates.
The consultants brought additional project management experience to the
project and ERP software experience, although not with the specific software
package used in this project. Because of the small size and limited scope of the
project, the staff consultants who were assigned to the project on a day-to-day
basis were relatively new to AA&Co and had limited experience. The
engagement manager for AA&Co. was an experienced consultant with nearly 20
85
years experience in project management and some ERP experience. His ERP
experience was limited because ERP was still relatively new.
The most significant contribution of the consultants was their ability to
focus exclusively on getting the project implemented by the target date. The
consults did not have the day-to-day distractions that company personnel
encountered.
Leading.
H-VII. CEO involvement.
The CEOs of both the pipe and brick divisions were only minimally
involved in planning and implementing of the project. Their major involvement in
the project was signing off on the capital project request and authorizing the
additional budget for the consultants.
Support for the project by senior management was limited to financial
support. Senior management spent little time on the project. At a kick off
training session conducted by the software vendor for the second attempt of the
project, pipe division management did not attend and brick division management
left after the first few minutes, clearly giving the signal to the other employees
that this training was not important.
H-VII. Champion.
No champion surfaced during the implementation at either of the divisions.
The project managers for both the first and second attempts and the accounting
manager were advocates for the project, but did not rise to the level that would
86
be described as champions. The project managers were both new to the

organization at the time of the project and had not yet developed the trust and
confidence necessary to reduce end-user resistance. The accounting manager
was a long-term employee who did enjoy trust and was occasionally able to
reduce user resistance by personal contact with fellow employees.
H-VIII. Managements effectiveness at reducing user resistance.
Management did little to reduce user resistance. In fact, a year or more
after the project was completed the new president of the pipe division, formerly
the VP-Sales during implementation, was still talking about the sales department
doing accountings work with the new system. This attitude exhibited by the new
president encouraged user resistance instead of reducing it. The brick division
president only complained about the poor printer speed at his site, which was
about 14 miles from the mainframe location on a simple telephone line
connection to the mainframe. (Even with the purchase of a higher speed printer,
this speed problem continued until a client-server architecture was adopted.)
Resistance by manufacturing management to implementing the remaining
manufacturing modules continued to be tolerated by top management.
Controlling
H-X. Steering Committee.
A steering committee was designated, but never met. Project progress
was informally discussed in staff meetings at both the pipe and brick divisions on
an irregular basis, usually if something was happening which affected people or
87
departments other than the implementation team. Progress was also briefly
reported in formal quarterly review meetings with parent company management.
Project Completion
This project, which started in June1990, was up and running before
December 31, 1991. All January 1992 accounting transactions were processed
by the ERP system. In terms of replacing the legacy system, the ERP system
could be deemed a success. However, replacing the legacy system and some
relatively minor cost reductions were about all the ERP system accomplished at
the time. The manufacturing portion of the system was still not fully implemented
in 1994 when the project manager left the company. Manufacturing successfully
resisted adopting the production modules which would require manufacturing
management to understand the ERP system and manufacturing personnel to
input transactions. An old, spreadsheet generated cost book was still used for
pricing and estimating instead of the standard costs generated by the ERP
system, despite numerous demonstrated errors in the cost book.
Information provided by the new system was timelier and more accurate
than information from the legacy systems. Printed reports were not replaced by
the new system and were still generally run in the data processing department
because of its high-speed printers. Few managers invested the time to learn to
use the query screen, preferring the printed reports provided by the new system.
User satisfaction was still low. Terminals gathered dust on managers desks and
were gradually eliminated. Very little of the promise of ERP systems was
88
realized by Pacific Clay. Organizational performance, the most important

measure of success in the DeLone-McLean model, was only marginally
improved, even after the success of the second implementation attempt.
Since the system was not used in manufacturing, ERP had no effect on
measures like inventory turnover, on-time deliveries, or delivery lead times.
Systems performance characteristics such as response time, reliability and ease
of use were not comparable to system because the legacy system was a remote
batch system. The ERP system utilized direct data entry and file maintenance by
users. Reports were generally comparable between the old and new system.
Once the initial rough spots in the system were addressed, the accuracy and
timeliness of reports on the ERP system were superior to the legacy system.
Users seemed generally satisfied with the reports from the ERP system, although
in many cases the reports were much longer than legacy system reports due to
the generalized report lay-outs of the ERP system compared to custom designed
reports from the legacy system.
The project was not completed on time considering the original project
failure. The completed implementation of the accounting modules was about a
year late compared with the original timetable. The budget was exceeded by
about $50,000, the cost of the consultants, which was not included in the original
cost estimates. Costs associated with maintenance on the old computer of about
$7,500 were also in excess of budget, as it was kept operating for a year longer
89
than anticipated1. During this time, periodic maintenance costs were incurred on
both the old and new computers.

Management did not evaluate the completed project on a return on
investment basis or on improvement in operating profit. The project was viewed
as something that the firm had to do to stay in business. The ERP project was
viewed by management as a strategic necessity to provide necessary accounting
and operating information rather than as a source of strategic advantage over its
competition. PCP management was satisfied that ultimately that:
1.
Costs were reduced with the new system by eliminating several

employees in the data processing department.
2.
It now had to tools to meet holding company demands for timely

and accurate monthly accounting closings
3.
It had the tools to provide operational information to division

management.
This implementation is an example of something that is not unusual in

ERP systems implementations. Even though the potential of such systems is
great, users frequently take advantage of only the most basic capabilities of the
system (Sousa & Goodhue, 2003).
Based on the six-dimensional model used in this study, the PCP
implementation should be classified as unsuccessful. Organizational
1 Original implementation plan called for disposal of IBM System 3 in January 1991. The actual
disposal date was over a year later.
90
effectiveness was not improved significantly. Since organizational effectiveness
is the most important of the six goals the implementation fails to meet the
requirements of the model. On other dimensions systems performance did not
improve from the users perspective and user satisfaction was low in all areas
outside of accounting.
Using other success measures, the project was not completed on time or
on budget. Nevertheless, the company believed its specific goals of cost
reduction and replacing the legacy systems were met. Results on cost saving
were likely more modest than expected as some personnel cut backs in the
information technology area resulted in additional personal in the user
departments. Not all data entry was eliminated. Some was just shifted to other
functional areas.
In the late 1990s, Pacific Clay Products felt it needed to upgrade its
systems to insure Y2K compatibility. The costs to upgrade MFG/PRO were more
than the company was willing to spend. The company converted to MANAGE
2000 by ROI Systems. The manufacturing portion of ERP has still not been
adopted.
91
Cases 2 and 3
Smith International, Inc.
The Smith International, Inc. 2001 Annual Report indicates that the
company manufactures and markets premium products and services to the oil
and gas exploration and production and petrochemical industries and other
industrial markets. The firm generated revenues for 2002 totaling $3.2 billion
with 53 per cent coming from areas outside of the U. S. Net income exceeded
$53 million in 2002. Smith employs over 11,000 workers (Smith International
Inc., 2002).
The company reports its operations in four business segments, three
manufacturing segments and one distribution segment. For these case studies
we are interested in the three manufacturing segments that implemented ERP.
These segments are:
1. Smith Bits which designs, manufactures and sells three-cone drill bits,
diamond drill bits and turbines used in the oil and gas industry.
2. Smith Services which manufactures and markets products and
services used for drilling, workover, well completion and well re-entry.
3. M-l, which provides drilling and completion fluid systems, engineering
and technical services for the oil and gas industry through its M-l Fluids
division. M-Is SWACO division manufacturers and markets ... solidscontrol and separation equipment waste-management services.
92
Smith Bits and Smith Services manufacture some products to stock while
other products are custom and made to order. The divisions also rent and repair
their products (Smith International Inc., 2002).
Two ERP implementation cases were examined at Smith International
presented as Cases 2 and Case 3. Although the same parent company was
involved the ERP implementations are distinctly different. Case 2, Smith Bits and
Smith Services, began their ERP implementation in 1993. Case 3, M-l, LLC.,
began its implementation in 1995. The M-l operation was not included in the
earlier Smith implementation as it was acquired while the Smith project was in
progress and because the company is only partially owned by Smith.
93
CASE 2
Smith Bits and Smith Services2
The Company.
Smith Bits designs, manufactures and sells three-cone drilling bits and
diamond drilling bits and related products. Smith Services manufactures and
sells products and services used in drilling and related operations.
The Project.
Smith Bits and Smith Services began their ERP project in 1993. The
operations were using MSA financials and payroll and a heavily customized
Martin-Marietta manufacturing package. Martin-Marietta discontinued support of
the version of the manufacturing package that Smith was using prior to 1993 and
provided no continuing support. The heavy customization of the system created
an obstacle to upgrading within Martin-Marietta software, because of the time
and cost of incorporating the changes made by Smith in the newer software. But
the IT department needed to change to some package that they could more
easily support.
Smith corporate management required the project team to select a system
that would operate on an open platform, with all software provided by one
vendor. A software selection committee at the Smith divisions was assigned to
2 A special thank you to the following Smith International employees for taking the time to discuss
their implementation project with me: Sherry Wheatley, Director, Telecommunications; Ron
Phillips, Manager, Accounting Services; and Jack Kardow, Director of Procurement and Logistics.
And thank you to Loren Carroll, Executive VP of Smith International, for making the research site
available.
94
look at potential software packages but deadlocked with each member favoring a
different software package.

The Decision
Smith corporate management broke the deadlock in the selection
committee by selecting Oracle. This ERP package met the requirement of an
open system but brought some risks to the project, since at the time of selection
only one Oracle ERP package was fully up and running. HP was selected as the
hardware platform. Smith implemented the entire Oracle suite including all
financials, discrete manufacturing and purchasing / inventory modules.
Project Team.
Arthur Andersen & Co (AA&Co.) was selected as consultants for the
implementation project and served as project manager. Oracle was also
represented on the implementation team. Smith employees on the
implementation team devoted about fifty percent of their time to the
implementation and the remainder to keeping the legacy systems running.
The Oracle software was so new that none of the project team had any
experience with it, not even the Oracle support people. This situation
represented a challenge to the implementation. Even training manuals had to be
improvised by the team.
Driving Factors.
The main driving factors for the project were cost reduction and scalability
of IT costs. Smith was staffed with nearly 100 IT employees to support its legacy
95
systems in a centralized IT department. Immediately upon adoption, the ERP

implementation project eliminated eight managers. Most of the remaining
employees were decentralized to the operating divisions.
At the beginning of the project team members expressed some concerns:
The Oracle ERP package was only installed in one other firm;
No communications network in place at Smith;
Smith IT questioned the adequacy of the HP 3000 Model H hardware

platform recommended by the consultants.
Results.
The project was completed and considered successful, but painful by the
company. Firm performance was initially impacted negatively by the project, but
rapidly improved as employees became more familiar with the tools the ERP
system provided. The project was completed on time, but over budget. Post
implementation support by the consultants was higher than the amount in the
budget and accounted for most of the cost over-run.

The implementation project is now reviewed using the ten hypotheses
identified in Chapter III.
Planning.
H-l. Integration of business and information technology planning.
96
Planning for Smiths ERP implementation originated in the IT area, as a

solution to IT problems involving costly to maintain legacy systems and as a
source of cost reductions to the company. Both business planning and IT
planning were done at Smith, but there was little integration of this planning. This
level of planning can be described as reactive planning, where IT reacts to the
business plan but has not input to it.
As it turned out the ERP system supported the aggressive acquisition
strategy adopted by Smith in the years following implementation. The new ERP
system enabled the company to easily absorbing 32 acquisitions in a 24-month
period. These acquisitions were seamlessly integrated into the ERP system.
The number of concurrent users on the ERP system grew from 80 in 1994 to 600
in 2003.
Subsequent to the ERP implementation, Smith has integrated its business
planning and IT planning to a larger extent. Each division now has a steering
committee made up of divisional business people and corporate and divisional IT
professionals. Business unit needs drive information technology planning today
at Smith. This level of planning can be described as linked planning, where
business planning is interfaced with information systems planning.
97
Organizing.
H-l I. Full-time project manager.
An employee of Arthur Andersen & Co. (AA&Co.), consultants on the
project, filled the full-time project management role. Smith employees
participated significantly in the project under the direction of the project manager.
H-lII. Reporting level of project manager.
The project manager reported to the Steering Committee, which in turn
reported to the top management team. The steering committee met weekly and
more often when dictated by project needs.
Staffing.
H-IV. Experience of the project manager.
The Smith team members describe the project manager as having
excellent project management skills. Since the Oracle software was so new, no
one on the project team, AA&Co. or Smith or Oracle, had much experience or
expertise with the ERP software package.
The project manager had adequate authority to manage the project by
working through the steering committee. The project manager and other AA&Co.
consultants did not know Smiths business requirements at a detail level, which
occasionally created problems. The project manager was motivated to succeed
by the fees charged by his firm and because Smith was a valued and long-time
AA&Co. audit client.
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The Smith organization was fully committed to the project. The project
team members described implementation as life or death importance to the
company. The ERP implementation project was given top priority by
management.
Smith employees who were members of the implementation team devoted
up to 50% of their time to the project. The balance of their time was used to keep
the legacy systems going.
H-V. Training.
The project provided training in the use of the new software only. No
business process training was provided. Team members described the training
as generally weak for both financials and manufacturing modules. Smith and the
consultants had to write software training manuals. None existed because
software was so new.
Smith approached training by having key employees attend Oracle
classes to train the trainer. Most of the training was provided to Smith
employees as the system was going live. The project members interviewed
generally thought the training was given too late. Only a minimal budget for
training was provided in the project budget but specific numbers were not
available.
H-VI. Use of Consultants.
Smith used Arthur Andersen & Co. as consultants for the project and to fill
the project manager role. Team members expressed satisfaction with the job
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done by the consultants given the limitations created by their lack of specific
business knowledge of the Smith divisions and the newness of the Oracle
software.
Leading.
H-VII. CEO Involvement.
CEO involvement was limited to approving and supporting the project.
Team members did not mention any direct involvement by the CEO.
H-VIII. Champion.
Team members could not identify anyone emerging as a champion during
the implementation project.
H-IX. Managements effectiveness in reducing resistance.
Members of the implementation team describe user resistance as
extreme. Manufacturing was especially skeptical saying the project would never
work. Information technology sophistication was very low at the Smith divisions.
Most employees had never used a computer. The resistance was very visible to
management. Management gave constant support to the project letting
employees know that the project was going to succeed and they had better get
on board.
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Controlling.
H-X. Steering committee.
A steering committee was used for project control. The committee met on
an as needed basis. Regular meetings were weekly, but implementation issues
frequently resulted in daily meetings. The executive staff reviewed the project
monthly.
AA&Co monitored project costs, which were reviewed weekly with Smiths
Chief Information Officer.
Success.
The project was considered to be successful by management and the
project team.
Inventory turnover improved. Problem areas in Inventory were made more

visible with the information provided by the ERP system. The ERP system
supported a cycle counting program, which improved the accuracy of the
inventory data.
ERP hurt on-time deliveries initially, but the MRP modules of the ERP system
gave management new tools and soon led to improved delivery times.
ERP negatively impacted lead times initially. A factor in this performance was
that many data files were not converted during implementation. Once the
data problems were eliminated, performance improved.
Systems performance initially was very poor. The hardware specified by the
implementation consultants was not adequate. The consultants had specified
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the HP 3000 Model H, which the highest performing HP CPU at the time it
was specified. This CPU proved inadequate to support the user base of
about 60 concurrent users. The hardware was upgraded 60 days after going
live to a Model I and again after 6 month to a Model K, as faster mainframes
became available. Smith later upgraded to a V-2250 and then a HP
Superdome as its needs increased.
The first six months were described as painful. MRP had to be run on the
weekends as it took 16 hours to process. Many late nights and weekends
were required to accomplish even a late accounting close. The quality of
reports from the ERP system reflected unbelievable improvement according
to Smith employees. Until the mainframe was upgraded, many reports had to
be scheduled to run overnight to keep from dragging down the system during
the day. This situation was inconvenient, but the hardware upgrades
described above soon solved this problem.
The accuracy and timeliness of the reports was also a great improvement.
Although the change in systems was painful to most users, once ERP was
implemented most users felt they had more effective tools to do their jobs.
Organizational performance improved following the implementation, but it is

hard to isolate the effect of ERP or to attribute the improvement directly to its
implementation. Shortly after implementation Smith acquired 32 companies
in a 24-month period masking any direct effect of the ERP implementation.
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Smith could not have seamlessly integrated these acquisitions into its
operations and financial reporting without the ERP system.
Company specific goals.

o
The company goal of cost reduction was met.
The project was completed substantially on time,
The project was over budget due to more extensive post implementation
consulting by AA&Co than was estimated in the budget.
Summary.
Although the employees involved in the project describe it as successful,
the feeling expressed was that it was very painful. One key team member stated
the project just about killed everyone. Team members reported that the
company felt the implementation of the ERP system lead to temporary advantage
over its competitors by providing better cost visibility and improved inventory
accuracy.
Although the company had previous experience at implementing the
Martin-Marietta system, team members felt generally that the experience was of
no benefit in the ERP implementation project since most of the employees
involved in the Martin-Marietta project had either left the company or been
reassigned to different duties.
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CASE 3
M-l, LLC3
Mission
M-l Drilling Fluids exists to be an innovative and respected global
energy services company, recognized for providing industry driven
total solutions for our customers through our products and services,
and to be the standard by which our competitors are measured.
(Computer Sciences Corporation, 1995)
The Project.
Prior to the ERP project, M-l was using a homegrown information system
on an outsourced IBM platform. The system was composed of islands of
automation. Information provided was accounting oriented, not operations
oriented. Districts, made up of many field locations, reported manually on a
batch basis to corporate headquarters. No communications network was in
place.
The legacy information systems provided accounting information, but very
little operating information, other than inventory. Even the inventory information
was of limited use because incomplete, inaccurate and late data for receipts and
shipments from the regions caused inventory detail to be incorrect. Accrual
adjustment could be made to the financial data to correct these inaccuracies, but
3 Special thanks to Loren Carroll, President and CEO of M-l, LLC for allowing this research, and
to Janet Hall, Director of Information Technology, for arranging the schedule during my visit, and
to Vern Cooper, M-l Business Unit Application Manager, Lizette Hinojosa, Invoicing Supervisor;
Charles Berta, Manager, Supply Chain Management Worldwide, John Newcaster, VP Supply
Chain Management and eBusiness, Linda Norvell, Credit Manager, and David Bunch, Eastern
Hemisphere Controller, for taking the time to discuss their implementation experiences with the
researcher.
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these adjustments were not reflected in the computerized detail inventory records
used by the operations staff.

The ERP project was the companys effort to get up to date. The
impetus to do it now, rather than later, was a foreseeable Y2K problem. M-l had
to do something with their computer systems to deal with the year 2000 problem
and the move to ERP was the logical course of action. Modifying existing
programs to be Y2K compliant would be very costly and still leave the company
with an outdated system. ERP would provide a tool to support the companys
global management efforts by providing the information necessary to support
current and anticipated future growth.
Another goal expressed by management was to make corporate overhead
general and administrative costs, including IT costs, more scaleable and less
subject to the necessity of layoff and hiring cycles as the economy and the
demand for the companys products fluctuated.
Other events influencing the need for the project were ownership changes
in the company and the recognition of the lack of operational data for supply
chain management.
Obstacles the company faced included deeply embedded organizational
practices. The company had never embarked on such a significant project
before with the potential for dramatic organizational change. Earlier projects had
involved only incremental change.
The Decision
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Smith International Inc. had purchased a 64% interest in M-l from Dresser
Industries in 1993. Halliburton owned the remaining 36% of M-l at this time.
Computer applications were still running on the Dresser Industries mainframe.
Moving IT applications off the Dresser main frame on to a Smith/M-I mainframe
was an important goal of the project to complete the ownership change.
Supply Chain Management. Supply chain management process at M-l
was poor when Smith took over from Dresser. Andersen Consulting was
engaged to improve the system by looking at best practices. Information that
was adequate for financial purposes was not providing enough operational data
to improve supply chain management. Piecemeal attempts to improve the
situation did not work. An attempt to implement a warehouse management
system failed. Since many other companies were looking to ERP as a solution
for their information needs, M-l decided to move forward in that direction. In
1995, Computer Sciences Corporation (CSC) was hired to conduct a feasibility
study and software search.
Transformation 2000.
CSC was also selected as consultants for the implementation project. M-l
named its ERP implementation project Transformation 2000, shortened to T2000. The T-2000 theme tied into the well-publicized Y2K problems most
companies were facing. In December 1995, CSC led a Financial Applications
Initiation Workshop for the M-l project. The objectives of the workshop were to:
Achieve consensus on the projects goals, objectives and vision of the future.
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Achieve consensus on the scope of the project.
Identify project-related principles, constraints & assumptions.
Identify Application Champions.
Describe Solution Design Lab.
Build team commitment to making the project successful.
Determine the next steps. (Computer Sciences Corporation, 1995)

The CSC presentation identified current problems including the volume of
data entry required, repetitive data entry, the length of time required for monthend closings, process complexity requiring workarounds and informal networks
and the general timeliness of data as major problems. CSC observed poor
communications between districts and M-l corporate and inaccurate and invalid
information on customer billing submitted to M-l by the field locations, resulting in
extended days sales outstanding.
CSC and M-l created a Solution Design Lab (SDL) consisting of project
leadership from both partners and application champions. The SDL had several
purposes including:
Identify how M-l will change existing business processes using Oracle
Financials.
Verify application performance requirements.
Identify conversion strategy.
Identify interface strategy.
Identify performance engineering strategy.
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Start user acceptance test planning (Computer Sciences Corporation, 1995).
The SDL was conducted in January and February 1996. Application

champions, also referred to as super users, were designated and empowered to
make decisions for their functional areas. The SDL process was designed to
challenge the status quo by adopting best practices where feasible.
M-l selected Oracle as the vendor for the financial part of the system,
including general ledger, accounts receivable, accounts payable and fixed assets
modules. Both the cost of Oracle, which was much lower than alternatives such
as SAP, and the prior selection and current use of Oracle by other Smith
International divisions (see case 2) were factors in the decision.
Since Oracle at that time did not have a process manufacturing package,
Datalogixs Global Enterprise Manufacturing Management System (GEMMS)
was selected for purchasing, manufacturing, inventory, cost accounting and sales
order entry modules. M-l elected to use the process manufacturing software of
Datalogix because the manufacturing of drilling fluids involved a process system.
Subsequent to the implementation, M-l determined that the discrete
manufacturing should have been examined more closely. The product
distribution aspects of the Oracle discrete package were more robust than the
GEMMS process manufacturing software. Also, the discrete package had tighter
integration to the Oracle Financials software. The interface software between
Oracle and GEMMS was the source of many implementation problems. The
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Oracle discrete package may have been a better fit with M-Is business needs
than the GEMMS process package that was adopted.
An interesting sidelight and a source of implementation problems was that
Oracle acquired Datalogix during the course of the M-l project. Unfortunately,
the acquisition caused an exodus of Datalogix personnel with expertise in the
GEMMS software. M-l experienced a shortage of trained GEMMS support staff
during the implementation.

The M-l implementation is now examined below using the ten hypotheses
used in this study.
Planning.
H-l. Integration of business and IT planning.
The state of IT planning at M-l at the time of ERP adoption appears to be
characterized by the IT plan supporting the business plan. The business plan
called for cost control in the IT area, scalability of IT costs, more transparency of
data throughout the organization and improved financial and operating
information. The timing of the project was influenced by foreseeable year 2000
problems. The ERP system proposed by information systems department was
selected to accomplish these business goals.
Organizing.
H-ll. Full-time project manager.
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Project management was staffed both by the consultants and the

company. CSC was hired as outside consultants and full time project managers.
Two M-l employees were selected as full-time joint project managers for the
company. Janet Hall was selected as co-manager from the information
technology department. David Bunch was the co-manager from the accounting
department.
H-lll. Reporting level of the project manager.
The project managers reported to the M-l Information Technology
Director, Lynda Parsons. Parsons was also the head of the steering committee.
Parsons reported to the Chief Financial Officer, Chris Rivers.
Staffing.
The consulting project manager was a CSC employee who is described by
team members as having excellent project management skills, a good working
knowledge of the financial software, but limited knowledge of the process
manufacturing and distribution software. The CSC consultant had little
knowledge of M-Is business process, but the M-l co-project managers provided
that knowledge to the team.
H-V. Training.
Training was primarily keystroke and data entry training. Business
process training was not conducted. Testing was not used in connection with
training.
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A major problem relating to training developed during implementation. On
the advice of the consultants, M-l had left report writing to the users. These
users were provided with training on the report writer software, however, this
training proved inadequate. When the system went live very few reports were
available. The M-l systems staff worked with users to get the reports up and
running. The complexity of Oracle report writing proved too much for the
average user, despite what the software vendor considered adequate training.
As a result, more reports were generated with the ERP system than by the
legacy systems. Users, supported by M-l IT staff, designed reports to meet the
needs of individual employees rather than designing multi-purpose reports. This
result was the opposite of what M-l had anticipated.
M-l selected CSC as consultants for the implementation project. The
consultants participated in a feasibility study and were subsequently selected to
manage the implementation project.
A particularly interesting comment by the M-l project co-leader was that
the project really started going well when the company started managing the
consultants rather than letting the consultants manage them. I concluded what
she was really saying was that when the company personnel felt they had gained
sufficient knowledge about the project and self confidence in their abilities, they
took ownership as their project, not the consultants project.
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One of the team members expressed the need for the right balance of
internal employees and consultants on the project. The consultants drove the
project forward so there is no going back, but the employees knew the customer
needs and the internal business processes.
Leading.
The CEO did not play an active role in the project, although he supported
it fully. Two members of the top management team were directly involved in the
project and on the steering committee. These managers were the CFO and the
VP of Supply Chain Management.
H-VIII. Champion.
Team members identified the two M-l co-project managers. Janet Hall and
David Bunch, as champions for the project. These implementation team
members worked to reduce user resistance and coordinate the needs of the
various functional areas of the business.
Management used an active employee communications program to inform
employees of the importance and progress of the T-2000 program. The culture
of M-l is that of a top-down style of management. Management made it clear to
all employees that the project was going to happen and that they might as well
get on board.
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Reduction of user resistance was key to the projects success. Few of tol
l's employees had ever worked anywhere else. They lacked IT sophistication
and had no vision of how a well-designed system could help them do their jobs
better. One of the implementation team members recalled that after a visit to a
small warehouse for implementation and training. The warehouse employee
called her after the team left and did not know how to turn on the computer. Most
employees had never used a mouse.
Controlling
A steering committee, which included members of top management,
controlled the project. Top management representatives included the CFO and
VP of Supply Chain Management. The CEO was not a member of the
committee. Other members included the IT Director of M-l, the Project Manager
from CSC and the IT Director from Smith International, M-Is majority owner that
had already implemented ERP in most of its operations (see Case 2).
At least one steering committee member believed the committee could
have been more effective. This member believes the committee did not
represent a broad enough base of the company to accomplish its goal. The
spotty attendance at steering committee meetings by some functional members
also contributed to the lack of a broad base input to decision making. This
member felt that IT, a part of the financial organization, drove the committee
agenda. Operations did not play a major role. This member felt a lack of
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communications between finance and the other functions affected the linkage
between the GEMMS process manufacturing system and the Oracle financial
system.
ERP Upgrade
It is interesting to note that M-l recently upgraded to Oracle 11 .i with little
trouble. Lessons learned in the original implementation seemed to have made
the recent conversion seamless. The whole organization had a much higher
level of IT sophistication based on its experience with the T-2000 project. Very
little user resistance was experienced in this conversion. Some employees
expressed that they were now getting some on the features they had expected
on the initial installation.
Summary
During the course of this research, implementation team members
contributed their thoughts on critical success factors. Chuck Berta, Manager,
Supply Chain Management Worldwide, and a steering committee member,
believes the following items were CSFs for the M-l implementation.
Get the right people on the project, people who care about doing a
good job.
Provide support and direction, i.e., project leadership.
Have top down support giving a clear message that its going to
happen so you might as well get on board.
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Have the right mix of internal people and consultants. Consultants
drive the project.

Despite the existence of these CSFs for the M-l project, Berta indicated it
took two years to deal with the errors from the initial implementation. However,
he believes that embarking on the project was clearly cheaper than doing nothing
at all.
Janet Hall, co-project leader for M-l, believed the following to be CSFs in
the implementation:
1.
Executive buy-in and participation in decision-making. Important

business process changes have to be made during the course of
implementation.
2.
Employees dedicated to the project. Familiarity with current

business processes and the willingness to accept change and help
champion it throughout the company are key characteristics of good
core team members.
3.
Minimize customizations. They are expensive when they are done,

and more expensive when the system is upgraded.
4.
Minimize programming data conversions. It may be cheaper and

more efficient to manually do some conversions.
5.
Phased in (roll-out) approach was instrumental in M-Is success,

rather than big bang. Users could adjust gradually to the new system
and work out the bugs.
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6.
Web based training was nice, but should not replace hands-on
training.
Hall indicated some areas where things should have been done
differently.
1.
Reports were a huge gap when the system went live. Users
were just not able to program their own reports effectively. The result
was non-standardized reporting and more reports on the new system
than on the old system.
2.
More emphasis on testing and reconciling.
3.
Control the consultants. Make sure their decisions agree with

the business model of your company. Watch for cost overruns. Weed
out unproductive consultants early. Even though you may not be
knowledgeable on ERP, remember you are the customer. Take
control.
The M-l implementation can be classified as successful. The project

seems to meet most of the criteria of the DeLone-McLean model. All employees
interviewed would agree that the systems quality and information quality have
improved. Users seem to be satisfied with the system, especially after the
upgrade to Oracle 11 .i. All but one employee interviewed expressed that the
new system had made a favorable impact on their job. Some differences of
opinion existed in the organizational impact. While the financial and information
systems employees seemed very satisfied with the ERP system, the supply
116
chain employees do not feel it fully met their needs, although they acknowledged
the ERP system provides them with better information.

The project was completed on time and on budget. Company objectives
for the project were satisfied.
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CASE 4
Pacific Aerospace & Electronics, Inc.4
Mission Statement
Our mission is to expand our position as the industry leader and
innovator o f hermetically sealed interconnect systems, ceramic EMI
filters, precision machined components, and bonded metal
technologies. We are focused on being the quality leader and
preferred supplier to world-class enterprises in the aerospace,
aviation, defense, energy, medical, and telecom industries. (Pacific
Aerospace & Electronics Inc., 2003b)
The Company.
Pacific Aerospace & Electronics, Inc. is an engineering and manufacturing
company based in Wenatchee, WA. The company designs, manufactures and
sells components and subassemblies used in technically demanding
environments. Products produced for the aerospace, defense and transportation
industries include machined, cast and formed metal parts and subassemblies,
using aluminum, titanium, magnesium and other metals. Products produced for
the defense, electronics, telecommunications and medical industries include
components such as hermetically sealed electronic connectors, instrument
packages and ceramic, filters and feedthroughs. Sales for the year ended May
31, 2003 totaled $65 million. U.S. operations generated $33 million of this
amount. The company employed 614 people at May 31, 2003
4 Information for this case was obtained in an interview with Dan Paquette of ESI International.
Dan was formerly employed by Pacific Aerospace and Electronics and was the ERP project
manager and manufacturing manager. Thanks also to Don Wright, president, and Kevin Batman
for setting up the contact with Dan.
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(Pacific Aerospace & Electronics Inc., 2003a).

The Project.
The ERP implementation project discussed in this case involves the
Pacific Coast Technologies (PCT) division of Pacific Aerospace & Electronics
(PA&E). This division designs and manufactures interconnect devices and
electronic assembly packages. The division was moved from Oregon to
Wenatchee, WA in 1995. Legacy systems were a mixture of manual systems
and single function personal computer based accounting programs without any
integration. No formal MIS function or network existed at PCT. Approximately
3700 engineering drawings were stored on floppy disks.
In setting up the relocated operations in Wenatchee, Don Wright,
president of PA&E, decided to implement an ERP system at PCT. Mr. Wright
was impressed with the operation of the ERP system that was up and running at
Cashmere Manufacturing, a recent acquisition of PA&E. Wright believed that an
ERP system could be used to pull the organization of PCT together and enhance
the visibility of its operating and financial performance. By August 1995 PCT had
78 full time employees. Fifty-eight employees were involved in direct or indirect
manufacturing operation, eight in engineering and twelve in SG&A functions.
The project was conducted very informally. The production and IT
manager at PCT, formerly with the Cashmere division, was the project manager.
The company adopted the same software package used at the Cashmere
Manufacturing division, MCS by Enterprise Systems, Inc. This ERP product is
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tailored to companies with from 10 to 500 employees. Cashmere had operated
its ERP system since 1988.

The implementation project included modules encompassing all business
processes of the company, including accounting, sales and estimating,
manufacturing, quality control and human resources. Since there were no
significant legacy systems to replace, each module was implemented as the
company was ready. The project took six months to complete. Since the
implementation was modeled after the Cashmere division system, success was
defined as having the system work at PCT like the one already functioning at
Cashmere.
The company believed the project was successful. The companys goals
were to provide state of the art information systems to the operation and to give
management visibility of operating results. These goals were met to
managements satisfaction.
Specific performance measures were not available since the division had
very little visibility prior to the system. Such common metrics as lead times, ontime deliveries, and inventory turnover were not maintained. Since the ERP
system produced the first meaningful reports, the operation had no basis for
comparison with prior report usefulness or accuracy and timeliness. Probably,
the most significant measure of success was that the system allowed the
business to grow from about $180,000 in sales to several million dollars with the
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addition of very few overhead employees. Management feels that the

implementation project was worth the investment.
The on-time, on-budget aspects of the project cannot be measured easily.
Since the project was very informal, no specific timetable or budget was
established. The project manager believes managements expectations of time
and cost were met.

We will now examine the implementation project in the framework of the
hypothesized critical success factors.
Planning.
Business process planning and information systems planning were tightly
interconnected since the small executive team drove the companys agenda and
functional areas often overlapped. The CEO believed the ERP system was key
to the operating needs of the division and was a necessary management control
system to give top management visibility of divisional operations.
Although business executives and IS executives shared the same vision
of the role of information technology in the firm, differences were observed
concerning the control and mission of the system. The primary differences were
between the financial and manufacturing managers over the ownership of the
system and between sales and engineering concerning access to information.
Top management understands top-level IT objectives, but not the details.
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Organizing.
H-l I. Full-time project manager.
A formal project was not established with a project manager. The
manufacturing manager also filled the role of IT manager and was responsible for
the ERP implementation project. The majority of the project managers time
during the project was spent on the ERP implementation. The project manager
indicated that he had adequate authority to complete the project. The project
was a top priority of the management team.
The project manager reported to the president and CEO during the course
of the project. A matrix structure was not used in the project.
Staffing.
The project manager had substantial project management experience and
ERP experience prior to the project. He had implemented ERP at Cashmere
Manufacturing in 1988 and was in charge of the system from 1988 through 1994.
He was new to the business requirements of the PCT division and needed to
learn much about the needs of the business. Top management provided full
support according to the project manager. No special incentives were provided
to the project manager for successful completion of the project. Personal pride in
accomplishment was the prime motivating factor. The informal reward of
recognition of a job well done and intrinsic pride of accomplishment were
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adequate to motivate the project manager, without formal rewards such as a

bonus or promotion.
Project team members other than the project manager spent about 25 per
cent of their time on the project.
H-V. Training.
The project manager, who had used the software since 1988, conducted
user training. Employees met in a conference room for both business process
and software training. A test database was established and used in the training
process. No testing was used.
No consultants were used on the project.
Leading.
After the CEO initiated the project, his role was limited to approval support
for the project. He was only directly involved in the project when business
process options required his decision.
H-VI 11. Champion.
No champion was involved in the project. Top down management support
made it happen.
User resistance was an issue in the implementation, especially concerning
document control in the engineering department. Another issue was reluctance
123
of the manufacturing management to let sales have visibility of their operations.
Top down management support reduced this resistance.

Management used the up-and-running system at Cashmere to convey to
the employees what was needed. Employees were given a tour of the system at
Cashmere. The example of a fully operational system helped reduce resistance.
Controlling.
The implementation team functioned as a steering committee. Meetings
were held weekly attended by managers from each department. Costs were not
monitored during the project.
Competitive Advantage.
The project manager does not believe that any competitive advantage was
developed by the ERP project. The project was needed to keep PAE competitive
in its industry.
Other IT Projects.
The ERP implementation project was the first major IT project undertaken
by the firm.
Summary.
The PCT implementation can be classified as successful. It meets both
the companys criteria for success and the DeLone-McLean model success
profile. The implementation improved systems quality, which previously was a
mix of manual systems and stand alone PC solutions. Information quality
improved as a result of entering data once in the integrated ERP system. Users
were satisfied with the new system and used it. Individual users were satisfied
that the system improved their job performance and the organizational
performance improved with the addition of timely and accurate financial and
operating information. The organization was able to grow without adding
significantly to its administrative support staff.
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Case 5
Litton Industries, Inc
Aerospace Design and Manufacturing Division5
The Company
Litton Industries, Inc. was founded in California in 1953. The company

evolved into a major international organization with approximately 40,300
employees at more than 26 divisions and nine countries. The firm designs,
builds, and overhauls surface ships for government and commercial customers
worldwide and is a provider of defense and commercial electronics technology,
components, and materials for customers worldwide. In addition, the Company
is a prime contractor to the U.S. government for information technology and
provides specialized IT services to commercial customers and government
customers in local / foreign jurisdictions. Revenue for the year ended July 31,
2000 totaled over $5.5 billion and earnings exceeded $200 million (Litton
Industries Inc., 2000). In 2001, Northrop Grumman Corporation acquired Litton
Industries.
5 Thank you to William Weber for providing the information on the implementation at Litton
Industries, Inc. Bill was project manager in this implementation and is currently Director, Sensor
Engineering, Northrop Grumman Electronic Systems, Navigation Systems Division. Thanks also
to William Allison, a fellow Drucker student and former head of the division, for additional input on
the case and putting me in touch with Bill Weber.
126
The Project
This case describes an ERP implementation project in the Aerospace

Design and Manufacturing Division of Litton Guidance and Control, a segment of
Littons Advanced Electronics Group. This operation has 3,500 employees and
revenues of approximately $600 million. The division experienced a series of
acquisitions prior to the ERP project that left it with several non-integrated
mainframe systems supplemented by PC based point solutions. This situation
was untenable and created the need for the ERP implementation project.
The division did not expect to develop a competitive advantage from the
ERP systems implementation, but to keep up with information technology in its
industry. The project was necessary to maintain its competitiveness, but would
not give the firm an advantage over its competition.
The most formidable problem facing this division was that the currently
available ERP solutions were not suitable for the bulk of its business. Litton GCS
needed an enterprise level system that had sophisticated manufacturing and cost
management capabilities that would allow contract progress billings while
optimizing the use of materials and manufacturing resources across multiple
contracts.
The Decision
The solution for the Litton division was to adopt the best available software
for its industry from several different vendors in a bolt on configuration. This
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approach is also described as best of breed. WDS (now Manugistics) was

selected for manufacturing and procurement processes. Oracle was selected for
financial processes. TIP QA was the choice for quality assurance,
PeopleSoft for human resource management and payroll, and Matrix One for
product data management.
Software selection was conducted by the Core Team composed of
representatives of the business functions of the division with a small
representation by the IT function. Vendor candidates had to have a working
system that supported Aerospace and Defense requirements. The Core Team
selected three vendors for evaluation. Each of the three vendors presented their
products to show they met the requirements of the request for proposal. These
presentations were required to include scripted product demonstrations.
William Allison, formerly the division manager, provided some additional
input into the best of breed decision. Litton had several divisions in the Los
Angeles area that had developed independent of each other. Littons corporate
level wanted to make more rational choices in the purchase of items used by all
of these divisions, such as information systems. The problem it faced was how
much control to exercise over its highly independent divisions. Litton had to
balance the benefits of cost savings and standardization with the flexibility and
independence the divisions had enjoyed in the past.
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At the time of the decision on the ERP project, one division was in the
process of implementing a standard, out of the box Baan ERP system, another
division was using a heavily customized version of WDS, and a third division had
no IT infrastructure. A joint oversight team was established to analyze the
options. The team outcome was the combination of packages described above.
WDS (now Manugistics) was selected as the core, with the incorporation of best
of breed bolt-on packages such as PeopleSoft for human resource management
and Hyperion for program financials.
The project implemented modules that covered all business processes
from forecasting to sales, as well as post delivery support. Implementation
occurred as a big bang for each of the divisions three facilities. The division
completed the implementation project in 30 months. The Director of Information
Technologys greatest concerns embarking on the project were maintaining
continuing senior management support for the project and the ability to convince
the user community to make the process changes required by the new software.
The project began in 1996 and was completed in 1998. The project leader was
able to successfully maintain senior management support and confidence
throughout the project.
Project Goals
Managements goal for the project included the following:
Reduce operating costs
Become more competitive in industry
Improve business processes
Create tools for productivity improvements
Use ERP as a driver for process re-engineering and organizational

change.
Senior managements number one goal for the ERP project was cost
savings. After the project was completed management determined that an
annual savings of $15 million was realized and was convinced the project was
successful. Management believed the other goals were met also.
Specific metrics tracking success were not accumulated. The new ERP
system provided visibility of these metrics, such as inventory turnover, on-time
deliveries, and delivery lead times. The company knew these metrics were poor
before the ERP system, but they were much more visible after the system and
could be easily tracked and used to set financial and operational performance
goals.
In the area of systems performance, the change from batch type legacy
systems to close to real time processing improved overall performance. Data
accuracy improved because of 1.) the integration of the data across the system
resulting in fewer data entry errors and 2.) the ease of use of the new system.
The overall quality of reports was better with the new system and the volume of
reports more than tripled. Sharing information in a common database improved
the accuracy of the reports.
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User satisfaction was initially worse with the ERP system, however, in
about three months it began to improve rapidly. Today, satisfaction is definitely
better than with the legacy systems.
Organizational performance increased as the discipline was improved by
the availability of near real time metrics. Single data entry reduced data
processing costs. Documented work process and instructions improved
efficiency and standardization.
When asked, does management consider the ERP project worth the
investment? the Director of Information Technology responded that
management may not like the investment, however they believe there are not
any viable alternatives.
The ERP implementation project was completed on time only if a
contingency allowance was considered. The original timetable was 24 months
but a 6-month contingency period was allowed over the 3 sites. The project was
completed in 30 months.
The results were similar for the project budget. The original budget was
$14 million, with an additional $2 million set aside as a reserve. The project was
completed at a cost of $15.7 million.
The division had no previous experience with an IT project of the
magnitude of this ERP implementation project.
Now we will examine the hypothesized critical success factor in the Litton
implementation.
131
Planning.
The business side of the division initiated the ERP project with IT as a
strong implementation partner. During the ERP project, business planning and
information technology reported to separate organizations within Litton
Industries. The level of integration prior to-the project was reactive planning,
where the information technology function supports the business plan, but has no
input into the plan.
Currently, the business side and IT agree on an annual operating plan
with covers the details of the IT projects for the year. This arrangement is
moving the company closer to linked planning where business planning is
interfaced with information systems planning.
The IT manager believes the business executives and IT executives share
the same vision of the role of IT in the firms mission. The role of the business
side is to initiate the projects. The role of IT is that of an implementation partner.
IT executives understand current business objectives and business executives
understand current IT objectives.
Organizing.
The Director of Information Technology performed the project manager
leadership role and was assisted by a project control specialist. The project
manager devoted about 75% of his time to the ERP implementation project.
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The project manager believed he had adequate authority to complete the
project. A high level of importance was given to the ERP implementation project
compared to other business goals.
A matrix structure was used in the project. Each functional area provided
a representative to the Core Team.
H-l 11. Reporting level of project manager.
The project manager reported to a Vice President, but had direct access
to the President.
Staffing.
The IT manager, who served as project manager for the ERP
implementation project, had substantial experience and knowledge of the
business and in management. An engineer by training, he had almost 25 years
of experience working in engineering, while supporting manufacturing, materials
and finance. His comprehensive knowledge of how a company worked across
the entire business environment coupled with his drive for improving the
divisions business processes made his leadership indispensable to the project.
ERP knowledge was gained rapidly during the project.
For future major projects, the company developed what it calls the project
management homeroom, which supplies highly experienced project managers
when the business side needs them.
133
The division did not use specific financial or other incentives to motivate
the project manager. The project managers motivation was to build a reputation
for success with the executive team. In this case, the informal reward of
recognizing the project managers accomplishments sufficed as a source of
motivation, without formal rewards such as a bonus or promotion.
H-V. Training.
Initially, the software vendors provided training to the Core Team and
Super Users in each business area. These implementation team members then
became trainers and prepared and delivered area-specific courses. Both
business process training and software training were provided.
The timing of training varied with the employees position. Super Users
were trained prior to system testing. The balance of company employees was
trained prior to implementation. Testing was used in connection with training.
The key to training, according to the project manager, was to practice real life
business scenarios spanning order entry through simulated product shipment.
Timing of training was also important because the bulk of the employees to be
trained were still required to maintain the day-to-day business with the legacy
systems until the cut over to the ERP system. The key to training was for each
employee to gage for himself or herself their readiness to go live.
Consultants were used during the project for up-front planning,
requirements planning, conference room pilot preparation, and testing. Individual
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consultants were used rather than a firm. Use was heaviest during the first twothirds of the project with only a couple of business specialists remaining through
implementation.
Leading.
The role of the president was to drive and communicate the need for
change. The presidents support was demonstrated in special newsletters,
articles in the monthly division newspaper, hosting program review sessions with
the project leaders and addressing the project during weekly staff meetings.
H-VIII. Champion.
A champion played a significant role in the project, providing pep talks to
management and the project team as needed. The champion at this Litton
project was a senior consultant with several years experience within aerospace.
He had spent the last ten years implementing ERP systems. He played a dual
role as a mentor to the senior staff on the dos and donts of implementing ERP,
and teaching the ultimate potential of how an ERP system could benefit the firm.
Resistance to the ERP project varied by management level. Upper
management level did not show much resistance. Lower management levels
and employees showed more resistance. Management dealt with the resistance
by conveying that they could not live with disparate systems in the division.
Management used education, progress reviews with employees and re-emphasis
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of the need for change. Management also implied that those who could not
embrace these changes might consider moving on to another job.
Controlling
A steering committee headed by the IT Director/Project Manager met
monthly to review project progress and resolve outstanding implementation
issues. Project costs were tracked by the divisions accounting system.
Summary.
The ERP project at Litton is viewed by management as successful and
meets the success criteria of the DeLone-McLean model. Systems quality and
information quality improved with the project. Users were satisfied they had
better tools to do their jobs. The organization benefited for timelier and more
accurate financial and operational information.
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CASE 6
Halliburton Company6
The Company.
Halliburton describes itself on its web site as one of the worlds largest
providers of products and services to the petroleum and energy industries. In
2002 the company revenues totaled $12.6 billion and it employed approximately
83,000 workers. Halliburton conducts business operations in over 100 countries
throughout the world and in 2002 revenues from locations outside the United
States represented 67 percent of the companys revenues (Halliburton, 2002).
The company is made up of two major groups. The Energy Services
Group supplies products and services to upstream crude oil and natural gas
customers worldwide. The Engineering and Construction Services Group
provides engineering, procurement, construction, project management, facilities
operations and maintenance services for hydrocarbon processing and other
industrial and governmental customers. (Halliburton, 2002)
The Project.
In December 1994, the Energy Services Group outsourced all of its IT
applications to joint vendor group. In December 1995, the Energy and
Construction Services Group did the same. The joint vendor group, which
represented a best of breed approach by Halliburton, included Andersen
6 The author would like to thank Gary Tyler, Director - SAP Project at Halliburton for taking the
time to discuss this ERP project.
137
Consulting, Philips/Origin and l-Net. The agreement was a $750 million, 10-year
deal (Information Week, 2002).

Halliburton management became interested in ERP to improve their ability
to manage the company by creating a shared services concept for IT using
software that was neither from the Energy Services Group or the Engineering
and Construction Services Group. Management felt by adopting a system new to
both groups would overcome concerns that one group was forcing its systems on
the other. The project would create a single system that would eliminate 75
legacy systems (HSE Web Depot, 2004). Alan Horden, a Halliburton vice
president, stated, We had endless legacy systems that didnt talk to each other,
so none of the business units knew what other business units were doing, even
thought they often dealt with the same customers. We wanted a common
platform so that our managers could access information to help them make
smarter business decisions (Accenture, 2004).
Management also believed it could manage the business better with one
global consolidated system. The firm was also concerned that existing systems
might have Y2K problems. Other benefits from the systems would be shorter
time needed for monthly financial closings. Operating and financial information
would be standardized, better controlled, and more quickly available with the new
SAP system.
Gary Morris, a Halliburton executive vice president, stated, Our goal was
to become a lean, nimble organization that could provide seamless solutions to
our customers. An integrated strategy would differentiate us from competitors

and position us to capture greater market share (Accenture, 2004).
Halliburton launched a major SAP implementation called HALCO 21 on
January 2, 1997. Almost all the available SAP modules were used in the
implementation. A single production instance was used. Reporting instances
are refreshed nightly.
The implementation project was completed April 30, 2000. At completion,
approximately 95% of the Energy Services Group was on SAP and 30% of the
Energy and Construction Services Group. Over 700 people were involved in the
implementation. 17,000 employees in 110 countries use the application. At the
time of implementation, Halliburton represented the most aggressive SAP
installation in the world conducted at one time.
Three key themes were evident in this implementation:
The project wanted A-Team players for the implementation teams.

The best employees were recruited and transferred out of their regular
jobs for over 2 years.
Integrated team composition was important to project success. Co

leaders from Accenture and Halliburton headed functional teams, such
as the human resources team and the manufacturing team. Each
team included representatives from the Energy Services Group and
Energy and Construction Services Group, as well as representatives
from SAP, the software vendor, and one Halliburton IT technician.
139
Halliburton team co-leaders were picked for their functional knowledge
of the companys business, not IT skill.
Engagement of executives was very strong. One team leader

indicated he was impressed by how much the executives on the
steering committee learned about the system. The Halco 21 steering
committee met at least monthly and more often in the heat of
implementation.

We will now examine the potential critical success factors hypothesized in
Chapter III.
Planning.
H-l. Integration of business and IT planning.
Pre-ERP planning at Halliburton can best be described as reactive
planning. The IT function reacted to the business plan but had no input to it. IPlan, operational in 1994-6, was an effort by the IT function to find out from the
business side of Halliburton, what was needed in the area of large IT projects in
the future.
Integration has improved post-ERP project. SAP has created higher
visibility of IT in almost everyone in the organization. Wide organizational
involvement in the SAP project seems to have fueled a more detail level of
thinking about IT and its capabilities.
140
O rganizing.
H-ll. Full-time project manager
Halliburton had a full time project manager. The VP & CIO, H.D. Dick
Teel, gave up his post as CIO to head up the HALCO 21 project and many of his
key people followed him. Teel would best be described as the executive
administrative head of the project. Accenture consultant Paul Calvin, now
managing partner of Accentures Energy industry group in North America, was
the day-to-day project manager.
Teel was relatively new to Halliburton. He joined the company in 1994.
Speculation among team members was that Teel was hired to prepare
Halliburton for an ERP implementation. He paved the way for the SAP project.
The project manager reported to the Steering Committee, which included
several representatives of top management. The project manager exercised
adequate authority to manage the project. Both Teel and the Accenture staff met
with the Board of Directors at regular quarterly meetings and Teel had informal
access to the CEO.
Staffing
H-IV. Experience of the PM.
The project manager was the former CIO of Halliburton who gave up the
CIO post to head the project. He had business experience and project
management experience, but only a few years at Halliburton.
141
The Accenture project manager had extensive project management and
SAP implementation experience.

H-V. Training.
A change management team developed the approach to training. Both
business process training and software training were provided. Processes were
broken down into small pieces. Many processes were reengineered. Across
Halliburton pre-ERP process varied significantly. Even terminology used by the
business units was very different.
Due to the size of the project and the aggressive timetable, consultants
were needed to supervise the project. Accenture was selected as the
consultants and the firm was used throughout the project.
Leading.
The CEOs involvement began with the hiring of Dick Teel as CIO. Some
believe Teel was hired to prepare Halliburton for an ERP implementation. The
CEO was involved in the approval of the SAP project. Project team members
believe informal communications channels existed between Teel and the CEO
during the project. The CEO put in brief appearances at initial SAP training
sessions to signal his support.
The Board of Directors met with Teel and the Accenture project manager
during the course of the implementation at the regular quarterly meetings.
142
Support for the project was strong, especially on the Energy Services Group side
of the business.
H-VIII. Champion.
The most significant champions were the steering committee members
assigned to functional areas as mentors. See the discussion below on user
resistance.
User resistance was encountered primarily at the middle management
level. The top and bottom of the organization was not a problem. In fact the
lower level employees were very supportive. Management addressed this
resistance among middle managers by assigning a steering committee member
to each functional area.
Another means of reducing user resistance is the Halliburton reward
structure. Throughout the company a bonus system is used to tie compensation
to results delivered. Successful SAP implementation was a key goal in the
bonus system.
Controlling.
A steering committee met at least monthly and more often during the heat
of implementation. This committee had overall responsibility for the HALCO 21
project. The committee included members at the VP level from both operations
and overhead areas. Both of the major groups, the Energy Services Group and
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the Engineering and Construction Services Group, were represented on the

committee.
Each member of the steering committee was assigned as a mentor to a
functional design team and took on the responsibility of resolving conflicts in this
assigned area.
Prior Large Information Technology Projects.
One advantage Halliburton had in the implementation project was that in
the late 1980s eight or nine of the major companies in the Halliburton Energy
Services Group had been consolidated onto one system. This experience gave
the group a head start on an ERP implementation.
Implementation Method.
Implementation was conducted as a rolling big bang, with the rollout
extending from June 1998 to 2000. Six hundred people were involved in the
implementation, including the consultants, Accenture. Roll out began four
months before the scheduled implementation date with data conversion. Each
roll out team was composed of 20 Accenture consultants and 40 Halliburton
employees.
Performance Metrics.
Another interesting aspect of the Halliburton implementation is that the
company realized the need to develop performance metrics to measure the
outcomes of the implementation. Dan Spaulding, former director of management
reporting at Halliburton stated, We thought the benefits (of the ERP system)
144
would just naturally happen, but they dont. Spaulding developed 28 key
performance indicators (kpi), including inventory turns and accounts receivable
days outstanding, as well as 100 secondary indicators, to help assess the
effectiveness of the R/3 implementation. A value delivery group, separate from
the implementation project team monitored these indicators. (Osterland, 2000)
Post-Implementation Observation
It is interesting to observe that ERP did not solve all of Halliburtons IT
problems. After implementing ERP, Phil Defilippo, Halliburtons IT manager,
acknowledged the need to improve inventory accuracy in its warehouse, which
stood at less than 80%. That meant that we had a one-in-five chance of being
wrong whenever we went looking for a part...Data integrity was on a downhill
slide, and if you cant find the raw materials or finished goods, then your delivery
schedule goes awry. Using a wireless bar code data collection system and a
middleware package, Halliburton was able to improve accuracy to 93%,
increasing on time deliveries 10% and improving customer satisfaction.
(Anderson, 2003)
In 2003, Halliburton is implementing a data warehousing system for
information delivery. SAP is proving too difficult for casual users to obtain
needed information.
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Case 7
Kenworth Mexicana, S.A. de C.V.7
KENMEX
Kerwurtf* ttaafcanft & A
C.V,
The Company
Kenworth Mexicans, S.A. de C.V. (Kenmex) is a subsidiary of PACCAR,
Inc., a major international truck manufacturer. PACCAR trucks are marketed
under the trade names of Peterbilt, Kenworth, DAF and Foden. The vehicles are
manufactured in four plants in the United States, three in Europe and one each in
Australia, Canada, and Mexico.
PACCARs revenue for the year ended December 31, 2002 was nearly
$6.8 billion. Although this sales revenue exceeded 2001 revenue of $5.6 billion,
2002 revenue was substantially below sales volumes for 1999 and 1998 of $8.6
billion and $7.6 billion, respectively. The weak US economy contributed to the
decline in sales from the 1998-9 period to 2002. (PACCAR, 2002)
The parent company, PACCAR, does not have an ERP system. The firm
began an SAP implementation in the late 1990s, but the financial impact of falling
capital goods expenditures in a declining world economy caused the project to be
abandoned. However, the PACCAR subsidiary in Mexico implemented a Baan
ERP system and the subsidiary in England implemented an Oracle ERP system.
7 Thank you to Lilli Ley for providing information on the Kenmex ERP implementation project.
146
Kenmex is located in Mexicali, Mexico, where the company employs about
1500 people. Kenmex continues to dominate the competitive Mexican market

with more the 50 percent of heavy-duty tractor sales. In addition to serving the
Mexican market, Kenmex exported 1,100 trucks to the US in 2002 (PACCAR,
2002). Kenmex revenues are estimated at $500 million.
The Project.
Prior to the ERP project, Kenmex was running the HP-FAS (Financial
Accounting System), HP-MM3000 (Materials Management 3000), and an
internally developed systems to track truck chassis in production. The hardware
was an HP3000.
Several factors precipitated the need for the ERP project. The company
mentions the presence of new competitors and the removal of import barriers
due to NAFTA. These factors contributed to a change in the business
environment in Mexico. Like many consumers, Kenmex customers had become
more educated, sophisticated and selective. The company needed systems that
could support business processes that needed increased flexibility to meet
customer requirements such as new model introductions, increasing numbers of
options offered, lower costs and higher quality. Kenmex saw that competitors
were changing the rules of the game by offering financial packages as an
alternative to cash selling and customizing as an alternative to standardized
products. Prior to the ERP project, the company believed that all competitors in
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Mexico were well ahead of Kenmex in implementing state-of-the-art information
processing technology.
Baan IV c2 Multicurrency was selected as the software package for the
project following a request of proposal issued to several ERP vendors. The
following modules were implemented:
Table IV-2. Baan Modules Installed at Kenmex
Finance
General Ledger
Account Payable
Account Receivable
Financial Statements
Cash Management
Cost Allocation
Subsidiary Finance
Budget System
Distribution
Purchase Control
Inventory Control
Location Control
Cost Accounting
Manufacturing
MRP
Shop Floor Control
Project Control
BOMs & Routings
Cost Accounting
MPS
CRP
The project began in March 1998 with two phases. Phase A, the initial
project, consisted of distribution modules and most of the financial process
modules. Phase B, the second phase of the project, consisted of
manufacturing modules and the remaining financial application modules. Phase
A was scheduled to be completed in December 1998 and go live in January
1999. Phase B was to be completed in May 2000 and to go live in June 2000.
The major concerns of the project manager at the start were 1.) Whether
users on the project team would be able to fulfill their time commitments and 2.)
Whether management would remain committed to the project through the first
phase. The company addressed these concerns with steering committee
involvement and by assigning a sponsor role in each functional area.
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We will now examine the critical success factors hypothesized in Chapter
III.
Planning.
Kenmex aligns its business and IT planning by having an IT representative
on its strategic planning team. Methodology has been established to define key
strategic objectives for key projects. The IT manager believes that IT executives
absolutely understand the current business objectives. Yearly a steering
committee approves the alignment of business and IT objectives.
Organizing.
The Kenmex project was organized with a full-time project manager who
reported to the steering committee. A matrix organization was used. The ERP
project was given a high level of importance by the steering committee, which
reviewed progress on a monthly basis.
In addition, the core project implementation team and the key user
members were involved 100% on the project. The project manager had
adequate authority to complete the project.
The project manager reported to a steering committee.
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Staffing
H-IV. Experience of the Project Manager.
The project manager was selected from the managers in the company.
The individual selected had wide experience in the business and in project
management. Knowledge of ERP was developed during the project with the
support of the consultants.
H-V. Training.
Training for both business processes and software was provided. Training
was structured to meet the needs of the users. Some training focused on the
needs of the end user. Other training focused on technical skills.
The project work program included training, which was provided on
schedule. At the beginning of each phase of the project general concepts of the
project were covered, explaining the project goals, objectives and scope.
Testing was used in the form of simulations. Each sim tested new user
skills.
Kenmex used IBM and Wilson Solutions (specialists in Baan systems) as
consultants on the project. Consultants filled the role of project manager,
business consultants and technical consultants. Kenmex believes the
consultants contributed to the projects success.
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Leading.
The division manager was totally involved in the project. He knew each
task of the Gantt chart: he understood every phase, component of the project.
The division manager held weekly meeting to review progress, address delays
and review outstanding implementation issues. He also reviewed the project
budget at these meetings.
H-VIII. Champion.
A champion was involved throughout the project. He helped the project
management team resolve project issues, clarify business requirements and
facilitate resources. He was a constant source of support and advice to the
project team.
The company experienced some resistance to change throughout the
project. Management was aware of these problems. Consultants supported a
change management team in dealing with the resistance. Through internal
communications and meetings management expressed the need for the system
and the benefits that ERP will provide the organization.
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Controlling.
A steering committee reviewed the project progress, problem, delays and
expenditures on a weekly basis. The steering committee was composed of top
management of Kenmex. Senior management reviewed the project monthly.
Success Measures.
Phase A and Phase B were each completed on time and on budget.
Management considered the project successful. Reviewing specific business
process measures verifies this conclusion.
Inventory Turnover. Pre-project inventory turnover was 16 times. The
target was to increase turnover to 25 times. The turnover after the project was
completed increased to 32 times.
Receiving. The material receiving process was reduced from 3 days to
1.5 days.
Delivery times. Shipping logistics was reduced from two days to one day.
Reports. ERP systems reports are more flexible and easy to handle
compared to legacy system reports. A significant improvement in the ERP
systems is that reports are produced much faster, because the computer
infrastructure was improved along with the ERP software installation. Computer
response time was also significantly improved.
Users are now more satisfied with the ERP systems than with the legacy
systems. Organizational performance improved after the project but ERP was
152
not the only reason. As part of the project training Windows tools and group
collaboration were introduced in addition to ERP.
Management felt the project was worth the investment, but no return on
investment calculations were made available for this research. The companys
main goals in the project were cost savings and working capital improvement as
well as combining several legacy systems into one integrated system.
Management felt that each goal was accomplished.
153
Case 8
Northrop Grumman Corp.8
Inertial Navigation Systems
The Company.
Northrop Grumman Corporation is a global defense firm with $25 billion in

revenue. Headquartered in Los Angeles, California, the company provides
technologically advanced, innovative products, services and solutions in defense
electronics, systems integration, information technology, nuclear and non-nuclear
shipbuilding, and space technology. The firm employs 120,000 people with
operations in 50 states and 25 countries (Northrop Grumman Corporation, 2003).
The Navigation Systems Division is made up of several operations
acquired from Litton Industries, Inc. in 2001. The division revenues totaled
approximately $600 million and it employs 2,300 people in its domestic
operations.
The Project.
This ERP project involved the conversion of existing systems in the Inertial
Navigation Systems business, to the ERP system described in Case 5. The ERP
best of breed solution was selected as the standard for the new division.
8 Thank you to Howard Zillman for providing information about the Northrop Grumman Corp.
implementation.
154
The Decision.
Following the acquisition of Litton Industries, Inc., Northrop Grumman
Corporation management decided to form the Navigation Systems Division by
combining multiple Litton divisions into one division. The divisions were
operating using various forms of legacy systems. To provide for effective
interchange of information and standardization of financial and operating reports,
the best of breed ERP system described in Case 5 was adopted as the
standard for the new division since most of the businesses combined in the new
division already had this software installed. This project started in September
2001 .
One of the major concerns of the project was accommodating the needs
of the commercial business unit. After assessing the needs of this unit, some
new software was written to meet these needs.
The project was structured in four phases. At the time of this case three of
the four phases were successfully completed. The first three phases were
completed on or ahead of schedule and about $1 million under budget. The
fourth phase encountered some technical problems and will be two months
behind schedule and about $300,000 over budget. Despite these budget and
timing problem, the project manager expects to successfully complete phase
four.
155
The company goals were to combine the newly formed Navigation

Systems Division in one common ERP system with a minimal operational impact
to the business.
We will now examine the implementation using the hypothesized critical
success factor defined in Chapter III.
Planning.
Business planning and information technology planning are conducted by
two separate organizations at Northrop Grumman. However, a good working
relationship exists between the two groups. The level of planning can be
described as reactive planning, where the information systems function reacts to
the business plan, but has no input into the business planning process.
Business executives and IT executives at Northrop Grumman share a
common vision of the role of information technology in the organization.
Information technology executives have some knowledge of business objectives
but are not involved in forming the goals. Business executives have some
knowledge of information technology objectives.
Organizing.
The project was run by a full time project manager, who spent at least
75% of his time on the project. The project manager believes he has adequate
156
authority to complete the project. The project has support of the executive staff
as a high priority compared to other division objectives.
Under the matrix structure of the project the project manager reported to
the Vice President of Business Management for the division and the ERP Project
Office at the Sector level.
Staffing
The project manager has been with the company for over 20 years and
was previously Senior Manger of Finance. He has been involved in prior ERP
conversions. No special incentive was offered for successful project completion.
The project manager considered the project a regular part of his job and no
further motivation was required.
H-V. Training.
Training in both business processes and software were provided. The
current systems core users conducted the training. A small group of power users
were trained early in the project to assist in testing and to help train the end
users. The end users were trained just prior to the go-live date of the processes.
Two consultants were involved in the project, both from vendors. One
was from Oracle and the other was from Manugistic. The consultants played a
limited role, assisting in data mapping and process evaluation. The project
157
manager believes the consultants made a significant contribution to the projects
success.
Leading.
The CEOs main involvement was to establish the need for one common
ERP system throughout the division to provide uniform operational and financial
visibility.
H-VII I. Champion.
Several champions contributed to the project. Their main role was to
communicate the benefits that would result from the project to employees
throughout the division.
Some user resistance was experienced. Most employees realized that the
project had full senior management support and this resistance quickly faded.
Management was aware of user resistance and effectively conveyed their
support of the project to all levels of the organization.
Controlling.
Top management reviewed the project quarterly and at the end of each
phase. A steering committee helped resolve issues that the core team could not
158
resolve within the team. The ERP Project Office at the sector level monitored the
costs of the project on a weekly basis.

Results.
While the ERP project itself did not reduce inventory, the project provided
better visibility of what inventory was required and what was excess to
requirement. Management now has better tools to control inventory levels.
Systems performance after the project is more reliable with better
response rates. Data are more accurate, but as with any system ERP is
dependent on having data entered correctly and completely. Division employees
find the system fairly easy to use.
The reports from the ERP system are superior to those of the legacy
system. Most of the reports were created to user specifications after users
became knowledgeable of what information was available. These new reports
provide much better depth and breadth of information.
Users feel much happier with the ERP system primarily because they can
get critical data in a timelier manner that with the legacy system.
Organizational performance has improved because of better and timelier
data from the ERP system. Management considers the project worth the
investment because of the availability and visibility of critical business data.
159
SUMMARY OF CASE STUDIES
The potential critical success factors for all seven cases are summarized
in Table IV-3. Results of the case studies and questionnaire are discussed in
Chapter VI.
160
Successful
H-l. Integration
of BP and IT
planning
H-ll. Full Time
PM
H-lll.
Reporting level
of PM
H-IV.
Experience of
PM
H-V. Training
H-VI. Use of
Consultants
H-VII. CEO
Involvement
H-VIII.
Champion
H-IX.
Managements
effectiveness
in reducing
resistance
H-X. Steering
Committee
Table IV-3
Case 4
Case 5
Case 3
M-l
Pacific
Litton
Aerospace
Yes
Yes
Yes
Low
High
Low
Case 6
Halliburton
Case 7
Kenmex
Yes
Low
Yes
High
Case 8
Northrop
Grumman
Yes
Low
Yes (75%)
Yes
Yes
Yes (75%)
CEO
IT Director
Steering
Committee
Steering
Committee
V P - Bus. M gt
and E R P
pro ject office
PM-yes
ERP-yes
PM-yes
ERP-yes
PM-yes
ERP-no
PM-yes
ERP-yes
PM-yes
ERP-no
PM-yes
ERP-yes
Software
only
Yes
Software
only
Yes
BP and
Software
No
BP and
Software
Yes
BP and
Software
Yes
BP and
Software
Yes
BP and
Software
Yes
Minimal
minimal
minimal
Low
Yes
Minimal
Yes
Minimal
No
No
Yes
No
Yes
Yes
Yes
Yes
Low
Good
Good
Good
Good
Good
Good
Good
Yes, in
form only
Case 1
Yes
Yes
No
Yes
Yes
Yes
Yes
Case 2
Case 3
Case 4
Case 5
Case 6
Case 7
Case 8
Case 1
PCP
Case 2
Smith Intl
No
None
Yes
Low
No
Yes
Yes
No
GM
TMT
CFO
PM-yes
ERP-no
PM-yes
ERP-no
Software
only
Yes
161
PCP
Smith Intl
On-time
No
Yes
On/under
budget
No
No
Table IV-3
M-l
Pacific
Litton
Aerospace
Yes
No formal
Yes
plan
No formal
Yes
Yes
budget
Halliburton
Kenmex
Yes
Yes
Yes
Yes
Northrop
Grumman
Yes, with
contingency
Yes, with
contingency
CHAPTER V
ANALYSIS METHODS AND SURVEY RESULTS
This chapter discusses the results of the survey and the methods of
analysis.
The survey instrument was distributed as described in Chapter III. The
results of the survey mailing and responses are summarized in Table V-1
Table V-1
Questionnaire Mailing Summary
Harris Database used for selection

Selected randomly for mailing
Mailed (after eliminating 2 duplicates)
Returned for bad address, etc., could not find correct
information
Net mailing
Total responses received
Responses indicating no ERP or ERP in progress
Declined participation
Useable responses
Number of
Questionnaires
1995
1500
1498
44
1454
36
12
7
17
The initial mailing included 1498 firms selected at random from a listing of
1,995 firms with SIC codes indicating manufacturing prepared by Harris
Information Systems. Questionnaires were personally addressed to the CEO,
Chairman, CFO or CIO of the firm. Initial response to the survey was very poor.
In an effort to improve responses:
1. Second requests were mailed
2. Phone calls were made to encourage response
3. The questionnaire was reformatted to reduce physical size
162
163
4. Transmittal letter was rewritten

5. Stationery used was varied.
Despite these effort the response rate remained low. Although the
number of responses received to the questionnaire was much smaller than
anticipated, the respondents included the diversity of industry, firm size, soft
package used and functional area of respondent that was desired.
The responses were reviewed for missing data and answers to openended questions. Although several questionnaires contained missing data none
were deemed unusable. Open-ended questions are reviewed at the end of the
chapter.
Each question is considered a variable and is designated with a variable
number equal to the question number, i.e., the answers to question #1 was
designated V1. The questionnaire scoring is shown below the possible answers
in the balance this chapter.
We will now examine the results obtained from the questionnaire.
DEMOGRAPHICS OF RESPONDENTS
V57 reports the primary products of the respondents. The results are
presented in Table V-2. Examination of the table shows the wide diversity of
companies responding to the survey.
164
Table V-2
Primary Products of Respondents (V57)
Aluminum Die Cast Products
High Temperature Materials
Beer (2)
Movies and TV Shows
Compound Substrate
Pharmaceuticals
Cultured Dairy Products
Pipeline Equipment
Poultry
Dram Modules
Electrical/Electronics
Rock Crushing and Processing Equip.
Food/Liquid Products
Semiconductors
Frozen Food Entrees
Wine
V58 summarizes the sales volume of respondent companies. While the

majority of firms report sales under $500 million, 4 firms exceed $1 billion in
revenue. Table V-3 summarizes the sales volume of the respondents.
Table V-3
Sales Volume of Respondents (V58)
Sales
Number of firms
Under $500 million
10
$500 million to $1 billion
2
Over$1 billion
4
V59 reports the completion year of the ERP implementation project.

Reported dates varied from 1994 to 2004 and are shown of Table V-4.
1995 and prior

1999
2001
2002
2003/4
Table V-4
Implementation Completion Dates (V59
2
15.4%
3
23.1%
3
23.1%
2
15.4%
3
23.1%
V60 reports which software package was used in the implementation

project. Table V-5 indicates respondents used thirteen different software
165
packages. The three most popular packages among the group were J.D.
Edwards, SAP, PeopleSoft and Oracle but these packages only accounted for
53% of the implementations. The sample results in a wide variety of software
packages.
Table V-5
ERP Software Used by Respondents (V60)
J.D Edwards (3)
Solomon (Microsoft)
SAP (2)
BPCS
PeopleSoft (2)
MAPICS
Oracle (2)
IFS
Ross Systems
Western Data Systems
Expandable
CMS
Syspro
V61 reports the implementation method used by the company. The big
bang approach converts all application to the new ERP system at one time. The
rollout approach implements one application at a time over a period until the
entire system is in use. Table V-6 reports the survey results indicating the roll
out method was used by 62.5% of implementations.
Big Bang
Roll out
Table V-6
Implementation Method (V61)
6
10
37.5%
62.5%
V62 reports the functional background of the respondent. Table V-7

reports the survey results indication responses from general management,
finance and accounting, operations, and information technology/systems. The
largest number of responses was from finance and accounting with 35.3%.
166
Table V-7
Functional Area of Respondent (V62)
General Management
4
Finance and Accounting
6
2
Operations
Sale and Marketing
0
IT/IS
5
23.5%
35.3%
11.8%
29.4%
V63 is an open comment section. Few comments were received in this

section.
SUCCESSFUL VERSUS UNSUCCESSFUL

The questionnaire asked respondent to categorize the implementation as
successful, partly successful, barely successful or unsuccessful (V1). The next
ten variables ask the respondent to answer questions developed to measure the
six dimensions of success defined by DeLone and McLean (1992).
Since V1 is a subjective evaluation by the respondent, the following ten
questions are designed to determine the result of ERP systems implementation
based on the six dimensional success factors of the DeLone and McLean model
discussed in Chapter III.
V1
Table V-8
Variable V1 Success
How would you rate the ERP system implementation experience you are
referencing for this questionnaire?
Successful
(1)
Partly Successful
(2)
Barely Successful
Unsuccessful
(3)
(4)
Summary of subjective success responses. 71.4 percent of the responses

(10 out of 14) indicated their implementations were successful, while 21.4
167
percent (3 responses) indicated partly successful. One response indicated an

unsuccessful implementation.
Summary of six dimensional success variables.
For purposes of data analysis two additional variables have been created
from the data captured in V2 through V10. First, a continuous variable describing
success or unsuccessful implementations is developed by summing variables V2
through V10 and dividing by the number of variables. Therefore:
V101 = (V2+V3+V4+V5a+V5b+V5c+V5d+V6+V7+V8+V9+V10)/12
Variable (V101) is used as a continuous dependent variable in performing
multiple regression analysis for each individual hypothesis.
The coding of this variable (V100) was determined after the responses
were returned and V101 was computed. Variable V101 is used to divide the
responses into two approximately equal sized groups of successful and
unsuccessful projects. Cases with mean responses to V101 of equal to or
greater that 4.0 are classified as successful. Cases with mean responses less
than 4.0 are classified as unsuccessful.
To test the contribution of the variables V2 to V10 on the calculation of the
continuous success variable (V101) and the success/failure variable (V100) a ttest was performed on the means of V2-V10 with the grouping determined by
V100. The difference in group means of V5a, V5b, V5c and V6 are significant at
the <.001 level. The difference in group means for V5d, V7, V8, V9 and V10
were significant at the <.050 level. The differences in group means for V2 were
168
significant at the <.100 level. Only V3 and V4 failed to be significant. Removing
V3 and V4 from the calculation of V101 did not affect the classification of cases
as successful or unsuccessful in V100.
The original intent was to include V11, does management consider the
ERP system worth the investment, in the calculation of V100. However, the
results were such that V11 was almost a constant and would not contribute to
differences in groupings. Only one respondent indicated no on this question.
Table V-9
V1 Respondents subjective perception of the outcome of the ERP system
implementation.
Value Label
Value
Frequency
Percent
Successful
1
10
71.4%
2
Partly Successful
3
21.4%
Barely Successful
3
1
7.1%
Unsuccessful
4
0
0%
Total
14
100%
Mean
1.36
Std Dev
.633
V2 Respondents performance rating on inventory turnover.
Value Label
Value
Frequency
Percent
1
Decreased
0
2
Slightly decreased
3
17.6%
Same
3
6
35.3%
4
Slightly increased
5
29.4%
Increased
5
3
17.6%
Total
17
100%
Mean
3.47
Std Dev.
1.007
V3 Respondents performance rating of on-time deliveries.
Value Label
Decreased
Slightly decreased
Same
Slightly increased
Increased
Value
1
2
3
4
5
Frequency
Percent
0
0
10
2
4
62.5%
12.5%
25.0%
169
Table V-9
Total
165
Mean
3.63
Std Dev
V4 Respondents performance rating of delivery lead times.
Value Label
Value
Frequency
Increased
1
1
Slightly increased
2
1
Same
3
7
Slightly decreased
4
4
Decreased
5
3
Total
16
Mean
3.44
Std Dev
V5a. ERP Systems performance - Relia Dility
Value Label
Value
Frequency
Decreased
1
Slightly decreased
2
4
Same
3
1
Slightly increased
4
3
Increased
5
9
Total
17
Mean
4.00
Std Dev
V5b. ERP Systems performance- response rates
Value Label
Value
Frequency
Decreased
1
1
Slightly decreased
2
1
Same
3
3
Slightly increased
4
2
Increased
5
10
Total
15
Mean
4.12
Std Dev
V5c. ERP Systems performance - accuracy of data
Value Label
Value
Frequency
Decreased
1
0
Slightly decreased
2
0
Same
3
5
Slightly increased
4
2
Increased
5
10
Total
17
Mean
4.29
Std Dev
V5d. ERP Systems performance-ease of use
Value Label
Value
Frequency
100%
.885
Percent
6.3%
6.3%
43.8%
25.0%
18.8%
100%
1.094
Percent
23.5%
5.9%
17.6%
52.9%
100%
1.275
Percent
5.9%
5.9%
17.6%
11.8%
58.8%
100%
1.269
Percent
29.4%
11.8%
58.8%
100%
.920
Percent
170
Table V-9
Background Information
1
2
3
4
5
Decreased
Slightly decreased
Same
Slightly increased
Increased
Total
Mean
4.00
V6 Quality of Reports
Value Label
Value
Decreased
1
Slightly decreased
2
Same
3
4
Slightly increased
Increased
5
Total
Mean
4.47
V7. Use of Reports
Value Label
Value
Decreased
1
Slightly decreased
2
Same
3
Slightly increased
4
Increased
5
Total
Mean
4.38
V8. Accuracy and timeliness of reports
Value Label
Value
Decreased
1
Slightly decreased
2
Same
3
Slightly increased
4
Increased
5
Total
Mean
4.13
V9 user satisfaction
Value Label
Value
Decreased
1
Slightly decreased
2
Same
3
4
Slightly increased
Results
3
1
6
7
17
Std Dev
Frequency
17.6%
5.9%
35.3%
41.2%
100%
1.118
Percent
2
5
10
17
Std Dev
Frequency
11.8%
29.4%
58.8%
100%
.717
Percent
1
2
3
10
16
Std Dev
6.3%
12.5%
18.8%
62.5%
100%
.957
Frequency
0
0
4
6
6
16
Std Dev
Percent
Frequency
Percent
41.2%
35.3%
25.0%
37.5%
37.5%
100%
0.806
171
Table V-9
Increased
5
4
23.5%
Total
17
100%
Mean
3.41
Std Dev
1.278
V10 Organizational Performance-Operating profit
Value Label
Value
Frequency
Percent
Decreased
1
0
Slightly decreased
2
0
Same
3
9
56.3%
Slightly increased
4
5
31.3%
Increased
5
2
12.5%
Total
16
100%
Mean
3.56
Std Dev
.727
V11- Does management consider the ERP system worth the investment
Value Label
Value
Frequency
Percent
Yes
1
16
94.1%
No
2
1
5.9%
Total
17
100%
Mean
1.06
Std Dev
.243
V12 Was the project completed on time?
Value Label
Value
Frequency
Percent
Early
1
1
6.3%
On time
2
3
18.8%
3 mo. late
3
2
12.5%
6 mo. Late
4
5
31.3%
1 year late
5
3
18.8%
Over 1 year late
6
2
12.5%
Total
16
Mean
3.75
Std Dev
1.483
V13 Was the project completed on budget?
Value Label
Value
Frequency
Percent
Under budget
1
0
On budget
2
6
35.3%
1%-10% over budget
3
4
23.5%
10%-25% over budget
4
2
11.8%
26%-50% over budget
54
5
29.4%
>50% over budget
6
0
Total
17
100.0
Mean
3.35
Std Dev
1.272
172
A correlation matrix of the background data was prepared and analyzed.
No variables were eliminated.
HYPOTHESES
The data testing each hypothesis is evaluated using the following
statistical techniques. These are the same statistical techniques used in the
earlier Sneller (1986) study of MRP critical success factors.
Independent t-Tests. Responses for successful and unsuccessful
implementations were compared using the t-test for significance.
The t-test is used to test for statistically significant differences
between the means of the responses of the implementations
classified as successful and those considered unsuccessful.
Multiple regression analysis. Multiple regression analysis uses V101 as a
dependent variable. This analysis identifies the best combination of
independent variables to predict the dependent variable, success.
Multivariate discriminant analysis. Multivariate discriminant analysis uses
the dependent variable V100. This analysis is useful in identifying
the ability of the dependent variable to predict membership in a
group, i.e., successful or unsuccessful.
In addition to examining the data for the dependent success variables, the
independent variables relating to each hypothesis are also examined with
dependent variables of on time project completion and on/under budget project
completion. This analysis for each hypothesis uses the same statistical analysis
173
techniques as used for project success. Results are presented following for each
hypothesis following the results for project success.

Planning
Hypothesis I. The level of integration of IS planning and business
planning is directly related to improved implementation outcomes.
If supported, this hypothesis would inform management of the necessity of
including IS planning as an integral part of business planning rather than as a
functional plan supporting the business plan. The most important lesson which
could be learned from this hypothesis is that the tasks of business planning and
IS planning are inseparable and better integration will lead to more successful
ERP implementations as well as improved business performance.
The four independent variables used to examine this hypothesis are:
V15
V-10
Planning Variables - V15 through V18
Which statement below describes best the status of Business Planning
and Information Systems Planning at the organization?
a. No planning:
No formal business planning or ERP systems
planning.
(1)
b. Stand-alone
Presence of either business plan or ERP systems
planning:
plan, but not both.
(2)
c. Reactive planning:
ERP systems function reacts to business plan but
has no input in the business planning process.
(3)
d. Linked planning:
Business planning is interfaced with ERP
systems planning. Systems resources are
(4)
e. Integrated planning: Business planning is indistinguishable for ERP
systems planning. They occur simultaneously
(5)
and interactively.
174
V16
IS and business executives share a common vision of the role and

contribution of IT to the organizations mission.
V17
Strongly disagree - disagree - no opinion - agree - strongly agree

(1)
(2)
(3)
(4)
(5)
IS executives understand current business objectives.
V18

(1)
(2)
(3)
(4)
(5)
Business executives understand current IT objectives.
(1)
(2)
(3)
(4)
(5)
An independent-samples t-test was conducted to evaluate the four

variables relating to H1. Table V-11 shows the results of the t-test of the
successful and unsuccessful implementations. Variables V12, V13, V14, and
V15 were examined for significant differences in the mean values at the .05 level.
None of the variables had significant differences in their mean values between
successful and unsuccessful implementation projects.
Standard multiple regression was conducted to determine the accuracy of
the independent variables, V15 through V 18, predicting ERP implementation
project success (101). Regression results indicate that no model of these
independent variables significantly predicts project success.
A discriminant analysis was conducted to determine whether the variables
(V15 to V18) could correctly classify successful and unsuccessful
implementations. One function was generated but was not significant.
Hypothesis I is not supported by the survey data.
175
Variable
Table V-11
Mean
Number
Standard
t-value
of cases
deviation
V15 Respondents
Successful
Unsuccessful
V16 Respondents
Successful
Unsuccessful
V17 Respondents
objectives
Successful
Unsuccessful
V18 Respondents
objectives
Successful
Unsuccessful
Degrees
of
Freedom
1-tail
probability
description of BP/IS integration

14
9
3.00
1.000
-.481
.319
7
3.29
1.380
description of executives sharing a common vision
3.67
9
1.000
.096
15
.462
8
3.63
.744
description of IS executives understanding of business
9
4.00
1.225
.000
15
.500
8
4.00
.535
description of business executives understanding o FIS
9
8
3.22
3.75
.972
.707
-1.265
15
.112
On-time and on/under budget.

Further exploration of the independent variables for this hypothesis was
conducted. Backward multiple regression analyses were conducted to determine
the accuracy of the independent, variables V15 through V18, predicting on-time
project completion and on-budget projects.
On-time project completion. Regression results indicate that the overall
model of two predictors (IS and business executives common vision of IT-V16
and IS executives understand current business objectives-V17) that significantly
predict on-time project completion, R2=.769, R2adj=-591, F(2,12,)=8.686, p<.01.
This model accounts for 76.9% of the variance in on-time project completion. A
summary of the regression model and bivariate and partial correlation
176
coefficients between each predictor and the dependent variable are presented in
Table V-12.
Table V-12
Multiple Regression Results of Variables V15 to V18 with V12
R
.769
Analysis of Variance
R Square
.591
df
Sum of Squares
Adjusted R
.523
Regression
2
19.478
Square
Standard
1.059
Residual
12
13.455
Error
F=
8.686
Sig F = .005***
s in the Equati Ul
Variable
B
SE B
t
Beta
S ig t
(constant)
-6.150
1.236
4.977
.000***
-2.484
V16
.641
-1.474
-3.879
.002***
V17
1.688
.637
1.008
2.651
.021**
*p < .10** p < .05 ***<.01
Interpretation of these results indicate that stronger shared vision of IT by

IS and business executives is related to on-time performance, while IS executive
understanding of current business objectives is less important.
A discriminant analysis was conducted to determine the ability of the 4
variables, V15 through V18, to predict on-time project completion. For purposes
of this test, a variable, V12r, was defined classifying all cases reporting their ERP
projects were completed early, on-time or three months late as the on-time group
and all cases more that 3 months late as the late group. One function was
generated by the analysis, but was not significant.
On budget project completion. Regression results indicate that the overall
model of one predictor, IS and business executives sharing of a common vision,
Ml
that significantly predict on budget project completion, R2=.738, R2adj=.544,
F(1,14,)=16.733, p<.01. This model accounts for 73.8% of the variance in on
budget project completion. A summary of the regression model and bivariate

and partial correlation coefficients between each predictor and the dependent
variable are presented in Table V-13.
Table V-13
Multiple Regression Results of Variables V15 through V18 with V13
R
.738
.544
R Square
Df
Sum of Squares
Adjusted R
.512
Regression
1
13.033
Square
Standard
.883
Residual
14
10.904
Error
F=
16.733
Siq F = .001***
3 in the Equati
B
Variable
SE B
Beta
t
Siq t
(constant)
7.255
.959
7.565
.000***
V16
-1.053
.257
-.738
-4.091
.001***
** p < .05 ***<.01
A discriminant analysis was conducted to determine the ability of the four

variables, V15 through V18, to predict on budget project completion. For
purposes of this test a variable, V13r, was defined classifying all cases reporting
their ERP projects were completed under budget or 10% or less over budget as
the on budget group and all cases more than 10% over budget as the over
budget group. The analysis generated one function that was not significant.
178
Organizing
Hypothesis II. Organizing the ERP implementation project under the
direction of a project manager whose sole responsibilities are project
implementation is positively related to implementation success.
The four independent variable used to examine this hypothesis are V19
through V22 shown in Table V-14.
V19
V20
V21
Table V-14
Organizing Variables - V19 through V22
Was a project to implement ERP formally established with a Project
Manager? Yes No
(1) (2)
What was the approximate percentage of the Project Managers time
devoted to the implementation project during each project phase?
20a. Chartering Phase
%
20b. Project Phase
%
20c. Shakedown Phase
%
20d. Onward and Upward Phase
%
What was the degree of authority given to the Project Manger to
complete the implementation?
Average -Authority only covered personnel assigned to specific
implementation tasks.
Low - below average - average - above average - high
V21a
V22
(1)
(2)
(3)
(4)
(5)
Did the project manager have the authority to accept or reject
implementation team members? Yes(1) No (2)
What was the level of importance given to the ERP implementation
project in relation to accomplishing other business unit objectives?
(1)
(2)
(3)
(4)
(5)
Table V-15 shows the results of the t-test of the successful and
unsuccessful implementations. Variables V19, V20, V21, and V22 were
examined for significant differences in the mean values at the .05 level. None of
the variables had significant differences in their mean values between successful
179
and unsuccessful implementation projects at the p<.05 level, however, V20c and
V20d were significant at the p<.10 level.

Table V-15
Number of Mean
Variable
Standard
t-value Degrees of
cases
deviation
Freedom
V19 Use of project manager
Successful
9
.333
-.082
1.11
15
Unsuccessful
8
1.13
.354
V20A Project Managers time spent on chartering phase
Successful
9
.517
.318
-.605
13
Unsuccessful
6
.617
.306
V20B Project Managers time spent on project phase
Successful
9
.789
.232
-.149
13
Unsuccessful
6
.808
.273
V20C Project Managers time spent on shakedown phase
9
Successful
.550
.339
-1.651
13
Unsuccessful
6
.825
.275
V20D Project Managers time spent on onward and upward phase
Successful
9
.283
.293
-1.411
13
6
Unsuccessful
.525
.371
V21 Authority of Project Manager
Successful
9
3.89
14
.601
.098
Unsuccessful
7
3.86
.690
V21A Project manager can accep t/reject team members
1.22
Successful
9
.441
-.127
15
Unsuccessful
8
1.25
.463
V22 Importance given the ERP project in relation to other objectives
Successful
9
4.11
.601
.678
14
7
Unsuccessful
3.86
.900
*p < 10
1-tail
probability
.468
.278
.442
.062*
.091*
.462
.451
.255
180
R
R Square
Adjusted R
Square
Standard
Error
Multiple
.683
.467
.378
.5152
Table V-16
Regression Results of Variables V19 to V22
df
Sum of Squares
Regression
2
1.395
Residual
F=
------------------------------------------------ V CM I C iU lO O
Variable
(constant)
V20b
V20c
B
3.634
2.252
-2.119
SE B
.496
.915
.654
12
5.257
1 n the Equatic
Beta
.825
-1.086
**p< 05
.265
Sig F =
.023**
T
7.328
2.462
-3.241
Siq T
.000
.030**
.007**
Backward multiple regression9 was conducted to determine the accuracy

of the independent variables (V19 through V 22) predicting success of ERP
implementation projects. Regression results indicate that a model including V20c
and V20b predicts project success, R2=.467, R2adj=.378, F(1,13)=5.257, p<.05.
This model accounts for 46.7% of variance in V101, the continuous success
variable. Results are summarized in Table V-16.
Projects where the project manager spent more time in the shakedown
and upward and onward phases are more likely to be unsuccessful. While
regression analysis can determine relationships between variables it does not
determine causality. In this case it is reasonable to assume that problems in a
9 Backward multiple regression initially enters all predictors into an equation. A significance test
is then conducted as if each were entered last. If not significant, the variable is removed. The
process continues until only significant predictors remain within the equation.
181
troubled implementation lead to more time spent in the shakedown and
onward and upward phases of the implementation project.

A discriminant analysis was performed on the independent variables to
determine whether these variables (V19 through V22) can correctly classify
successful and unsuccessful implementations. None of the independent
variables entered into the analysis at a significance of p<.05.
Hypothesis II is not supported by the survey data.
project completion (V12) and on-budget projects (V13).
model of one predictor (importance of ERP over other goals-V22) that
significantly predict on-time project completion, R2=.473, R2adj=-223,
F(1,12,)=3.450, p<.05. This model accounts for 47.3% of the variance in on-time
project completion. A summary of the regression model and bivariate and partial
correlation coefficients between each predictor and the dependent variable are
presented in Table V-17.
182
Table V-17
R
.473
.223
R Square
df
Sum of Squares
Adjusted R
.159
Regression
1
6.125
Square
Standard
1.332
Residual
12
21.304
Error
F=
3.450
Sig F = .088*
. . . . . . . . . I . . . . . . . . . . V C ll l u U I C > 5 in the Equati
B
SE B
Variable
Beta
t
Sig t
7.071
(constant)
1.918
3.688
.003**
V22
-.875
.471
-1.857
-.473
.088*
*p < .10 ** p < .05
Interpretation of these results indicates that placing more importance on

the ERP project in relations to other organizational goals is associated with ontime project completion.
A discriminant analysis was conducted to determine the ability of the
independent variables, V19 through V22, to predict on-time project completion.
For purposes of this test a variable, V12r, was defined classifying all cases
reporting their ERP projects were completed early, on-time or three months late
as the on-time group and all cases more that 3 months late as the late group.
The analysis generated one function, but the function was not significant.
model of three predictors (importance of ERP project in relation to other goalsV22, power of project member to reject team members-V21a, and establishing a
project with a project manager-V19) that significantly predict on-time project
completion, R2=.690, R2adj=.476, F(3,11,)=3.330, p<.10. This model accounts for
183
69.0% of the variance in on budget project completion. A summary of the

regression model and bivariate and partial correlation coefficients between each
predictor and the dependent variable are presented in Table V-18.
Table V-18
R
.690
R Square
.476
df
Sum of Squares
Adjusted R
.333
Regression
3
10.153
Square
Standard
1.008
Residual
11
11.181
Error
F=
3.330
Sig F = .060*
-------------------------Variables in the Equation-----------------------B
SE B
Variable
Beta
t
S igt
(constant)
6.964
2.297
.011
3.031
V19
-2.735
1.293
-.572
-2.115
.058
.771
V21a
1.855
.622
2.408
.035
V22
-.735
.383
-1.917
-.450
.082
**p < .05 ***<.01
Interpretation of the regression results indicate that projects with a high

level of importance compared to other organizational goals, were formally
established with a project manager and where the project manager did not have
the authority to accept or reject project members is related to on budget project
completion.
seven variables, V19 through V22, to predict on budget project completion. For
184
budget group. The analysis generated one function, which was not significant.
Hypothesis III. An organizational structure in which the project manager

reports directly to the business units senior manager is positively related to
implementation success.
The four independent variables used to examine this hypothesis are
shown in Table V-19.
V23
Table V-19
Organizational Variables - V23 through V26
What was the level of management to which the Project Manager
reported?
B oard o f D irectors - C E O /G e n e ra l M a n a g e r - D e p a rtm e n t M a n a g e r - L o w e r-le v el m a n a g e r
V24
V25
V26
(4)
(3)
(2)
(1)
Was a matrix organization structured for the project manager?
Yes
No
(1)
(2)
What percentage of the project groups time was allocated solely to the
ERP implementation?
1%-20%
21%-40%
41%-60%
61%-80%
81%-100%
(1)
(2)
(3)
(4)
(5)
What was the degree of project support given by the business units
senior manager?
Average - Occasional support given by the business units senior
manager.
(1)
(2)
(3)
(4)
(5)
An independent-samples t-test was conducted to evaluate the hypothesis

that an organizational structure in which the project manager reports directly to
the business units senior manager is positively related to implementation
success. Table V-16 shows the results of the t-test of the successful and
185
unsuccessful implementations. Variables V23, V24, V25, and V26 were
examined for significant differences in the mean values at the .05 level.
Independent variables V25 and V26 show significant differences in their mean
values between successful and unsuccessful implementation projects at the
P<.10 level.
Table V-20
f-test for Variables V23 to V26
Variable
Number
of cases
Mean
Standard
deviation
t-value
Degrees
of
Freedom
1-tail
probability
V23 Level of management to which project manager reportted

.527
Successful
9
2.56
.583
15
.285
.744
Unsuccessful
8
2.38
V24 Establishment of ma trix organization
1.56
.527
.477
Successful
9
-.059
14
Unsuccessful
7
1.57
.535
V25 Percentage of project groups time spent so ely on ERP implementation
project
Successful
9
2.78
-1.614
1.093
15
.064*
Unsuccessful
8
3.75
1.389
V26 Degree of support given to the project by business unit senior manager
3.67
Successful
9
.500
1.647
15
.060*
Unsuccessful
8
3.13
.835
* p < .10

the independent variables, V23 to V26, predicting ERP implementation project
success. The results of the regression analysis were examined for any variable
entering the equation at a significance level of 0.05 or less. No significant model
was generated.
independent variables, V23 to V26, to determine how effective these variables
186
can correctly classify successful and unsuccessful implementations. No model
qualified for analysis.

Hypothesis III was not supported.
model of one predictor (percentage of project groups time spent on the projectV25) that significantly predict on-time project completion, R2=.451, R2adj=-204,
Table V-21
R
.451
R Square
.204
df
Sum of Squares
Adjusted R
.142
Regression
1
6.709
Square
Standard
1.420
Residual
13
26.225
Error
F=
3.326
Sig F = .091*
5 in the Equati
Variable
B
SE B
Beta
t
S igt
(constant)
5.428
.999
5.434
.000***
V25
-519
.284
-.451
-1.824
.091*
* p < . 1 0 ***p<.001
187
Interpretation of these results indicates that the higher the percentage of
time spent by the project team solely on project implementation the more likely
the project will be completed on-time.
of this test a variable, V12r, was defined classifying all cases reporting their ERP
and all cases more that 3 months late as the late group. The analysis generated
one function, which was not significant.
model of four predictors (V23 through V26) that significantly predict on-time
project completion. No significant model was generated.
A discriminant analysis was conducted on the four variables and one
function was generated. The function was not significant.
Staffing
Hypothesis IV. Staffing the project manager position with an individual
with extensive business experience is positively related to system success.
shown in Table V-22.
V27
Table V-22
Approximately how many years of ERP systems experience did the
Project Manager have?
None 1-2 years 3-4 years Over 4 years
(0)
(1)
(2)
(3)
188
V28
V29
V30
Table V-22
Approximately how many years of project management experience did the
Project Manager have?
None 1-2 years - 3-5 years - 5-10 years - Over 10 years
(0)
(1)
(2)
(3)
(4)
How motivated was the Project Manger to achieve success of the
implementation project?
Average -Just motivated enough to complete
(1)
(2)
(3)
(4)
(5)
Were any monetary or non-monetary rewards promised for successful
completion to the project manager?
Yes
No
(1)
(2)
If yes, describe: (V30a)
unsuccessful implementations. Variables V27, V28, V29, and V30 are examined
for significant differences in the mean values at the .05 level.
Variable
Table V-23
Number
Mean
Standard
t-value
of cases
deviation
Degrees
of
Freedom
V27 Years ERP systems experience of Project Manager

Successful
9
2.11
.928
2.991
14
Unsuccessful
7
.57
1.134
V28 Years of project management experience of Project Manger
Successful
9
2.33
1.225
-.065
15
Unsuccessful
8
2.38
1.408
V29 Motivation of Project Manager
Successful
9
4.33
.500
-.740
14
7
Unsuccessful
4.57
.787
V30 Rewards promised to Project Vlanger
Successful
8
2.00
.000
2.280
13
7
1.57
Unsuccessful
.535
*p<.10 **p < .05 *** p<.01
2-tail
probability
.005***
.475
.236
.020**
189
Stepwise multivariate regression was conducted to determine the
accuracy of the independent variable, V27 thorough V30, predicting project
success. The results will be shown on Table V-24. Regression results indicate
that a model consisting of V27, the years if ERP experience of the project
manager, and V30, the use of monetary or non-monetary rewards, predicts ERP
implementation success, R2=.629, R2adj=-561, F(1, 11 )=5.710, p<.05. This model
accounts for 62.9% of the variance in project success (V101).
R
R Square
Adjusted R
Square
Standard
Error
Table V-24
Multiple Reg ression Results of Variables V27 to V30
.793
.629
df
Sum of Squares
.561
Regression
2
4.260
.4639
Residual
11
2.368
F=
9.308
Sig F = .004***
-------------------------Variables in the Equation-----------------------Variable
B
SE B
Beta
t
Si gt
(constant)
2.241
.555
4.034
.002***
V27
.304
.097
.583
3.125
.010**
V30
.733
.307
.446
2.389
.036**
**p < .05 ***<.01
A stepwise discriminant analysis was conducted to determine the ability of

four predictors - years of ERP systems experience (V27), years of project
management experience (V28), motivation of project manager (V29) and
monetary rewards (V30) - predicting success for ERP implementation projects.
The analysis generated two functions, however only one function was significant,
A = .301, X 2 (4, n=14) =11.759, p<.05. Two variables were entered into the
190
function: the number of years of ERP experience of the project manager (V27)
and the use of monetary or non-monetary rewards to the project manager (V30).
The variables project management experience of the project manager (V28) and
the project managers motivation level (V29) were excluded. Table V-25
presents the standardized function coefficients and correlation coefficients.
Original classification results demonstrated that 100 percent of successful ERP
implementation projects were correctly classified, while 100 percent of
unsuccessful projects were correctly classified. For the overall sample, 100% of
original grouped cases were correctly classified. Cross-validation derived 71.4%
accuracy for the total sample. The results suggest that projects with project
managers with three years or more ERP experience are likely to be classified as
successful. The mean of the discriminant functions are consistent with these
results. Successful implementations had a mean of 1.068, while unsuccessful
implementation projects had a mean o f-1.424. These results suggest that ERP
implementation projects with project managers that have three or more years of
ERP systems experience and do not use monetary or non-monetary rewards are
likely to be classified as successful.
Table V-25
Standardized Coefficients and Correlations of Predictor Variables V27 and V30
Variable
Correlation coefficients
Standardized
with discriminant function
coefficients
V27 Years of ERP
1.177
.530
experience
V30 Monetary rewards
.843
.505
191
Hypothesis IV is supported with respect to the ERP systems experience of
the project manager. In addition, firms that do not promise monetary or non
monetary rewards are more likely to succeed.
On time and on/under budget.
model of two predictors (years of ERP experience of the project manager-V27
and monetary rewards to the project manager-V30) that significantly predict ontime project completion, R2=.731, R2adj=-535, F(211,)=6.323, p<.05. This model
accounts for 73.1% of the variance in on-time project completion. A summary of
the regression model and bivariate and partial correlation coefficients between
each predictor and the dependent variable are presented in Table V-26
192
Table V-26
R
.731
R Square
.535
df
Sum of Squares
Adjusted R
.450
Regression
2
15.892
Square
1.121
Standard
Residual
11
13.823
Error
F=
6.323
Sig F = .015**
Veil IcaUltsi5 in the Equati
B
Variable
SE B
Beta
t
Sig t
(constant)
.647
1.342
.482
.639
V27
-.494
-.556
.235
-2.365
.038**
V30
.741
.632
2.243
3.025
.012**
* p < . 1 0 * * p < . 05 ***<.01
Interpretation of these results indicates that a project manager with more

ERP experience and the promise of monetary or non-monetary rewards to the
project manager are associated with on-time implementations.
and all cases more that 3 months late as the late group. The analysis generated
two functions; however, only function one as significant, A = .347, X 2 (4, n=14)
=10.581, p<.05, indicating that the function of predictors significantly
differentiated between on-time and late implementations. On-time status was
found to account for 65.3% of function variance. Standardized function
coefficients and correlation coefficients demonstrated that monetary rewards
193
(V30) and ERP experience (V27) were most associated with the function.
Original classification results showed that 80% of both the on-time cases and
100% of the late cases were correctly classified. For the overall sample, 92.9%
were correctly classified. Cross-validation derived 78.6% accuracy for the total
sample. The means of the discriminant functions are consistent with these
results. On-time projects had a function mean o f-1.704, while late projects had
a function mean of .946. These results suggest that companies that select a
project manager with ERP experience and do not offer monetary rewards to the
project manger are likely to be classified as on-time.
CT5
O
Table V-27
Standardized Coefficients and Correlations of Predictor Variables V27 to V30
with V12r
Variable
Standardized
coefficients
V30 Rewards to PM
.716
1.045
V27 ERP experience of PM
-.526
V28 Project mgt. exp. of PM
-.381
-.415
V29 Motivation of PM
-.153
-.059

model of two predictors (the project managers ERP experience-V27 and project
management experience-V28) that significantly predict on-time project
completion, R2=.867, R2adj=-752, F(2,11,)=16.673, p<001. This model accounts
for 86.7% of the variance in on budget project completion. A summary of the
194
Table V-28
R
.867
.6752
R Square
df
Sum of Squares
707
Adjusted R
Regression
2
14.448
Square
Standard
.658
11
Residual
4.766
Error
F=
16.673
Sig F = .000****
5 in the Equati
Variable
B
SE B
Beta
t
Sig t
ooo****
(constant)
5.257
.365
14.421
V27
-.590
.147
-.651
-4.011
.021**
-2.314
V28
-.348
.151
-.376
.008***
**p < .05 ***p<.01 ****p<.0(31

projects were completed under budget or 10% or less over budget as the on
budget group and all cases more than 10% over budget as the over budget
group. The analysis generated two functions; however, only function one as
significant, A = .227, X 2 (4, n=14) =14.849, p<.05, indicating that the function of
predictors significantly differentiated between on-time and late implementations.
On-time status was found to account for 77.3% of function variance. Original
classification results demonstrated that 100% of both the on-time cases and the
late cases were correctly classified. For the overall sample, 100% were correctly
classified. Cross-validation derived 78.6% accuracy for the total sample. The
means of the discriminant functions are consistent with these results. On-time
195
projects had a function mean of 1.711, while late projects had a function mean of
-1.711. These results suggest that projects with a project manager with both
ERP and project management experience are more likely to be completed on
budget.
Table V-29
with V13r
Variable
Standardized
coefficients
V27
.659
1.028
V28
.430
.626
V30
-.096
-.555
V29
.000
-.085
Hypothesis V.
Hypothesis V(a). The quantity and quality of training are positively related
to the success of the implementation project.
Hypothesis V(b). The use of testing in connection with training is
positively related to the success of the implementation project.
The support hypothesis V(a) would confirm the literature, which generally
concludes that training is important to project success and often inadequately
provided for in implementation plans. The support of hypothesis V(b) would
confirm that Snellers finding of the importance of the use of testing in training to
MRP implementation success is also important for ERP system success. Testing
in conjunction with training is an area neglected in both academic and
practitioner implementation literature that needs to be addressed. Errors in using
196
the ERP system can have consequences throughout the entire organization due
to the integrated database.

The four independent variables used to examine this hypothesis are:
V31
Table V-30
How much importance was placed on training during the
Average = Occasional user training on an as required basis
V32

(1)
(2)
(3)
(4)
(5)
Durinq which phase or phases of the project was business process
education provided?
a. Chartering Phase: Define decisions for
the business case and identify constraints
b. Project Phase: Get system and end
users up and running
c. Shakedown Phase: Stabilize, eliminate
bugs, get to normal operations
d. Onward and Upward Phase: Maintain
systems, support users, get results,
upgrade, systems extensions.
V33
V34
No
(2)
No
(2)
No
(2)
No
(2)
How long before the actual start up of the ERP system was
software specific training started?
1-2 weeks 3-4 weeks 5-6 weeks More than 6 weeks(1)
(2)
(3)
(4)
After system was up and running
(5)
What was the quality of training during the system implementation
phase?
Average = Quality of training only included the minimum
requirements for implementation.
(1)
V35
Yes
(1)
Yes
(1)
Yes
(1)
Yes
(1)
(2)
(3)
(4)
(5)
Was training given too early during the project requiring it to be

repeated?
Never
(1)
Rarely
(2)
Sometimes
(3)
Occasionally
(4)
Frequently
(5)
V36
197
Was testing used to verify retention of training materials presented?
Never
(1)
V37
Rarely
(2)
Sometimes
(3)
Occasionally
(4)
Frequently
(5)
Approximately what percentage of the total project budget was

spent on training?
None - 1-5% - 6-10% - 11-15% - 16-20% Over 20%
(0)
(1)
(2)
(3)
(4)
(5)
unsuccessful implementations of variables V31 through V37. These variables,
V31 through V37, were examined for significant differences in their means.
Means for V34, the quality of training during the system implementation phase,
and V37, percentage of total budget spent on training, were significantly different
between the two groups at a p<.10 level.
Table V-31
Number
Variable
Mean
Standard
Degrees
t-value
1-tail
of cases
deviation
of
probability
Freedom
V31 How much importance was placed on training
4.11
Successful
9
.601
.507
15
.619
Unsuccessful
8
3.88
1.246
V32a. During which phase of the project was business process education
provided-chartering phase?
Successful
9
1.44
.527
.059
14
.477
7
Unsuccessful
1.43
.535
V32b. During which phase of the project was business process education
provided-project phase?
9
1.11
Successful
.333
-.290
13
.389
6
1.17
Unsuccessful
.408
V32c. During which phase of the project was business process education
provided-Shakedown phase?
7
1.57
Successful
.535
.813
11
.217
198
Unsuccessful
6
1.33
.516
V32d. During which phase of the project was business process
provided-Onward and Upward Phase?
7
1.57
Successful
.535
.238
Unsuccessful
6
1.50
.548
V33 When was software specific training begun?
3.22
Successful
9
.833
.204
Unsuccessful
8
3.13
1.126
V34 Quality of 'raining during the implementation phase
Successful
9
3.56
.726
1.385
Unsuccessful
8
3.00
.926
V35 Repeating of testing
Successful
9
.867
3.00
1.000
Unsuccessful
8
2.63
.744
V36 Use of tesl ing
Successful
9
2.44
1.590
.098
Unsuccessful
8
2.38
1.302
V37 Percentage of project budget spent on training
Successful
9
2.67
1.000
1.384
Unsuccessful
7
1.86
1.345
* p<.10
education
11
.409
15
.421
15
.093*
15
.200
15
.462
14
.094*
Standard multivariate regression analysis was conducted to determine the

accuracy of the independent variables, V31 through V37, predicting ERP
implementation success. None of the variables entered a model at a significance
level of p<.05.
A discriminant analysis was conducted to determine whether the
independent variables, V31 through V37, could predict the success of an ERP
implementation. One function was generated, but was not significant, A = .073,
X 2 (10, n=13) =15.702, p=.108. All ten va ria b le s w e re e ntered into the function:
importance placed on training (V31), business process training in each phase

(V32a through V32d), timing of training (V33 and V35), quality of training (V34),
199
use of testing in connection with training (36) and percentage of project budget
spent on training (V37). Original classification results demonstrated that 100

percent of successful ERP implementation projects were correctly classified,
while 100 percent of unsuccessful projects were correctly classified. For the
overall sample, 100% of original grouped cases were correctly classified. Crossvalidation derived 69.2% accuracy for the total sample. The means of the
discriminant functions are consistent with these results. Successful
implementations had a mean of 3.034, while unsuccessful implementation
projects had a mean o f-3 .5 4 0 .. Although not significant by a small margin, the
results suggest that projects that place importance on training and spend more
money on training are likely to be classified as successful.
Hypothesis V is partially supported.
conducted. A backward multiple regression analyses were conducted to
determine the accuracy of the independent, variables V31 through V37,
predicting on-time project completion (V12) and on-budget projects (V13).
model of seven predictors (use of testing - V36; importance placed on testing V31; business process education in shakedown phase - V32c; business process
education in chartering phase - V32a; timing of training - V33; business process
education in onward and upward phase - V32d; and quality of training - V34) that
significantly predict on-time project completion, R2=.981, R2acir-947,
200
Table V-32
R
.990
R Square
.981
df
Sum of Squares
Adjusted R
.947
Regression
7
24.190
Square
Standard
.345
4
Residual
.477
Error
F=
28.979
Sig F = .003***
5 in the Equati
Variable
B
SE B
Beta
t
Si gt
(constant)
-8.207
1.399
.004**
-5.865
V31
-1.203
.202
-.827
-5.966
.004**
.337
V32a
2.531
7.517
.002**
.870
V32c
.756
.344
.260
2.198
.093*
V32d
1.268
.413
.037**
.436
3.073
V33
.204
.740
.477
.022**
3.635
V34
1.441
.260
.902
5.538
.005**
V36
1.079
.178
.820
.004**
6.063
*p < .10** p < .05 ***<.01
Interpretation of these results indicate that more importance placed on

training, giving business process training in the chartering, shakedown and
onward and upward phases of the project, high quality of training and no or low
use of testing are factors leading to on-time project completion. The finding of no
or low use of testing was the opposite of what the researcher expected.
seven variables, V31 through V37, to predict on-time project completion. For
201
their ERP projects were completed early, on-time or three months late as the ontime group and all cases more that 3 months late as the late group. The analysis
generated two functions; however, only one function was significant, A = .024, X 2
(10, n=12) =18.612, p<.05, indicating that the function of predictors significantly
differentiated between on-time and late implementations. On-time status was
found to account for 97.6% of function variance. Table V-33 presents the
standardized function coefficients and correlation coefficients. Original
classification results demonstrated that 100% of both the on-time cases and the
late cases were correctly classified. For the overall sample, 100% were correctly
classified. Cross-validation derived 75% accuracy for the total sample. The
means of the discriminant functions are consistent with these results. On-time
projects had a function mean o f-6.862, while late projects had a function mean
of 4.902. These results suggest that companies that place an emphasis on
training are likely to be classified as on-time.
Table V-33
with V12r
Variable
Standardized
coefficients
V33
3.035
.116
V32b
-.363
.064
V32c
1.504
.063
V32d
2.906
.052
V32a
5.522
.052
V31
-8.032
-.052
V34
9.844
-.035
V37
-.012
-.025
202
V35
V36
2.282
4.778
.016
.006

model of three predictors (use of testing - V36; timing of training - V33; and
project training budget-V37) that significantly predict on-time project completion,
R2=.629, R2adj=-506, F(3,9,)=5.096, p<.05. This model accounts for 62.7% of the
variance in on budget project completion. A summary of the regression model
and bivariate and partial correlation coefficients between each predictor and the
dependent variable are presented in Table V-34.
Table V-34
R
.793
R Square
.629
df
Sum of Squares
Adjusted R
.506
Regression
3
12.105
Square
Standard
.890
Residual
9
7.126
Error
F=
5.096
Sig F = .025**
5 in the Equati
B
Variable
SE B
Beta
t
Si gt
(constant)
1.350
1.278
1.056
.318
.857
V33
.306
.641
.021
2.796
V36
-.689
.205
-.724
-3.360
.008
V37
.437
.227
.449
1.928
.086
**p < .05 ***<.01

seven variables, V31 through V37, to predict on budget project completion. For
203
budget group. The analysis generated one function that was not significant.
While training does not appear significantly related to project success,
seven training variables (Importance placed on training, business process
training in chartering, shakedown and onward/upward phases, timing of training,
quality of training and use of testing) are significantly related to on-time project
completion. Three training variables (timing of training, use of testing, and
budget spent on training) are related to on budget project completion.
Hypothesis VI. Use of an ERP consultant for guidance in the system
implementation is positively related to implementation success.
Consultants are used in most ERP implementations resulting in as much
cost to firms as the software cost or $10 billion annually (Davenport, 1998).
Sneller found no statistically significant relationship between the use of
consultants in MRP implementations and project outcomes, raising the question
of the effectiveness of such expenditures. The Sneller study, while determining
whether the consultant was used in a training or direction role, did not separately
examine the relationship between roles played and project success. This study
will examine the relationship between project outcomes and the role filled by the
consultant in training, direction or organizational change
The independent variables used to examine this hypothesis are given in
Table V-35.
204
V38a
Table V-35
Was a consultant used on the project?
Yes No
( 1)
(2 )
V38b
Was the consultant the project manager?

Yes No
V38c
Was the consultant an individual or firm?

Individual
Firm
( 1)
(2 )
What percentage of time was a consultant used
during each phase of system implementation?
a. Chartering Phase - Define decisions for the
a.
business case and identify constraints
b. Project Phase - Get system and end users
b.
up and running
c. Shakedown Phase - Stabilize, eliminate
c._
bugs, get to normal operations
d. Onward and Upward Phase - Maintain
d.
systems, support users, get results, upgrade,
systems extensions_______________________
If a consultant was used, in which area(s) of the project was the
consultant used?
( 1)
V39
V40
(2 )
_%
_%
_%
a. Planning
Heavy - Moderate - Slight - Not involved

(3)
(2)
(1)
(0)
b. Vendor selection
Heavy - Moderate - Slight - Not involved

(3)
(2)
(1)
(0)
c. Software installation Heavy - Moderate - Slight - Not involved

(3)
(2)
(1)
(0)
d. Change management Heavy - Moderate - Slight - Not involved
(3)
(2)
(1)
(0)
V41
What impact did the use of a consultant have on project success?

N ot used - V e ry U n fa v o ra b le - U n fa v o ra b le - no im p act - fa v o ra b le - v e ry fav o ra b le
(0)___________ (U _____________ (2)_________ (3)
(4)
(5)
205
unsuccessful implementations. Variables V38 through V41 are examined for
significant differences in their mean values. The difference in group means for
V39b, percentage of consultants time spent in the project phase, was significant
at the p<.05 level. V38a, the use of a consultant on the project, was significant at
the p<.10 level.
Table V-36
Variable
Number
Mean
Standard
t-value
Degrees
deviation
of cases
of
Freedom
V38a Was a consultant used on the project?
1.22
.441
Successful
9
1.420
15
Unsuccessful
8
1.00
.000
V38b Was the consultant he project manager?
7
.522
12
.488
Successful
1.71
7
1.57
Unsuccessful
.535
V38c Was the consultant an individual or firm?
7
Successful
1.86
.378
-.589
13
.535
Unsuccessful
8
2.00
V39a Percentage of consultant time in chartering phase
.334
Successful
6
.392
-.930
11
7
.584
.399
Unsuccessful
V39b Percentage of consultant time in the project phase
Successful
.775
.282
1.809
11
6
7
.414
.411
Unsuccessful
V39c Percentage of consultant time in the shakedown phase
Successful
.433
.398
.399
11
6
7
.350
.355
Unsuccessful
V39d Percentag e of consultant time in the onward and upward phase
.192
.174
-.592
11
Successful
6
Unsuccessful
7
.300
.416
V40a Use of consultant in planning
Successful
7
1.29
1.113
-1.179
12
7
1.155
Unsuccessful
2.00
2-tail
probability
.088*
.306
.283
.186
.049**
.349
.283
.131
206
V40b Use of consultant in vendor selection

7
Successful
.86
.690
Unsuccessful
1.126
8
.88
V40c Use of consultant in software installation
7
Successful
.756
1.71
Unsuccessful
8
1.88
1.356
V40d Use of consultant in change management
Successful
6
.837
1.50
Unsuccessful
8
1.25
1.035
V40e Use of consultant in other area
Successful
3
1.67
1.528
Unsuccessful
3
1.00
1.000
V41 Impact of consultant on project
Successful
7
3.71
756
Unsuccessful
8
3.88
.835
* p<.10 ** p<. 05
-.036
13
.486
-.277
13
.393
.483
12
.319
.632
.281
-.389
13
.352
Standard multivariate regression was conducted to determine the

accuracy of the independent variables, V38 through V41, predicting ERP project
success (V101). None of the variables, V38 through V41 entered the model.
A discriminant analysis was conducted to determine whether independent
variables, V38 to V41, could predict project success. One function was
generated by the analysis, but the function was significant only to the p=.160
level. Had it been significant this function included V38b, B38c and V39a and
classified 53.8% of original grouped cases correctly.
Hypothesis VI is not supported by the survey data.
207

Neither analysis produced any significant results.
Hypothesis VII. CEO involvement in planning and implementation of ERP
systems is positively related to improved implementation outcomes.
This hypothesis tests one of the strongest theories supported in the
literature. The Sneller (1986) study concludes, MRP system implementation will
probably not succeed without the support and involvement of senior
management.
The independent variables used to examine this hypothesis are:
V16
V18
V42
Table V-37
Leading Variables - V16, V18, V42
IS and business executives share a common vision of the role and
contribution of IT to the organizations mission.
(1)
(2)
(3)
(4)
(5)
Business executives understand current IT objectives.
(1)
(2)
(3)
(4)
(5)
What level of involvement of the general manager/president did you
perceive?
Average - Occasional review of the implementation progress with
department heads.
low - below average - average - above average - high
(1)
(2)
(3)
(4)
(5)
unsu ccessfu l im p lem entations. V a ria b le s V16, V18, and V 4 2 w e re e xam in ed fo r
significant differences in the mean values at the .05 level. None of the variables
208
showed significant differences in means between implementations classified as
successful and those classified unsuccessful.

Table V-38
T-test for Variable V16, V18 and V42
1-tail
Variable
Number
Mean
Standard
t-value
Degrees
probability
of cases
deviation
of
Freedom
V16 Respondents descri ption of executives sharing a common vision
3.67
Successful
9
1.000
.096
15
.462
Unsuccessful
8
3.63
.744
V18 Respondents description of business executives understanding o fIS
objectives
Successful
3.22
.972
9
-1.265
15
.112
.707
Unsuccessful
8
3.75
V42 Level of involvement of GM/President
Successful
9
3.00
1.000
.000
14
.500
7
.577
Unsuccessful
3.00

the independent variables, V16, V18 and V42, predicting ERP implementation
project success (V101). No significant models were generated.
A discriminant analysis was conducted to determine whether independent
variables, V16, V18, and V42 could predict successful and unsuccessful ERP
implementations. One function was generated by the analysis, but was not
significant, A = .706, X 2 (3, n=16) =4.345, p=.227.
Hypotheses VII is not supported by the survey data.
determine the accuracy of the independent, variables V42, V16 and V18,
209
Only V16 was significantly related to on-time and on budget project

completion. Since this variable was discussed under hypothesis I, it will not be
covered again in this hypothesis.
Hypothesis VIII. The existence of a champion is positively related to the
success of the implementation project. Both management literature (Daft, 2000)
and systems literature (Beath, 1991) support the role of a champion in project
success. A significant relationship between project success and a champion will
inform management of the importance of this role. Actions can be taken to
encourage the development of champions and encourage their active
participation.
The three independent variable used to examine this hypothesis are listed
in Table V-39:
V43
Table V-39
Did a champion play a significant role in the system implementation?
A champion is someone who vigorously promotes their vision of IT and
overcomes hurdles in the authorization and implementation process.
Very significant - significant - not important - no champion
(3)
(2)
(1)
(0)
V44
What was the organizational level of the champion?
V45
Senior Management Middle Management Lower level Management

(1)
(2)
(3)
How effective was the champion in reducing user resistance?
no effect or
No champion - Very ineffective - Ineffective - Slightly effective - Very effective
(0)
(1)
(2)
(3)
(4)
210
unsuccessful implementations. Variables V43, V44 and V45 are examined for
significant differences in the mean values.
Variable
Table V-40
Number
Mean Standard
t-value
deviation
of cases
V43 Did a champion play a significant role?

Successful
9
2.11
.782
Unsuccessful
8
1.63
.518
V44 Organizational level of champion
Successful
8
1.25
.463
Unsuccessful
8
1.50
.535
V45 How effective was the champion in reducing
Successful
8
3.50
1.195
Unsuccessful
8
2.75
1.165
*p < .10
Multiple R
R Square
Adjusted R
Square
Standard
Error
Variable
Constant
V43
Degrees
of
Freedom
2-tail
probability
1.490
15
.079*
-1.000
14
.167
user resistance?
1.271
14
.112
Table V-41
Multiple Reg ression Results of Variables V43 to V45
.527
.278
df
Sum of Squares
.226
Regression
1
1.947
.6010
B
2.816
.530
Residual
14
F=
5.392
Sig F =
.036**
SE B
.467
.228
Beta
T
6.031
2.322
Si gT
.000
.036**
.527
.361
**p<.05
Standard multivariate regression was conducted to determine the

accuracy of the independent variables, V43 to V45, predicting project success.
211
Regression results indicate that the model containing V43, the role of a champion
in the implementation, significantly predicts project success, R2=.278, R2adj=-226,

F(1, 14)=5.392, p<.05. The model accounts for 27.8% of the variance in project
success.
A stepwise discriminant analysis was conducted to determine whether the
independent variable, V43 to V45, could predict project success. One function
was generated and was significant, A = .775, X 2 (1, n=16) =3.445, p<.100,
indicating that the function of predictors significantly differentiated between
successful and unsuccessful projects. One independent variable, role of the
champion (V43), was entered into the function. The variable on organizational
level of the champion (V44) and effectiveness of champion in reducing user
resistance were excluded. Table V-42presents the standardized function
coefficients and correlation coefficients. Original classification results determined
that 77.8% of successful ERP implementation projects were correctly classified,
while only 37.5% of the unsuccessful projects were correctly classified. For the
overall sample, 58.8% were correctly classified. Cross-validation derived 58.8%
accuracy. The means of the discriminant functions are consistent with these
results. Successful ERP implementation projects had a function mean of .504
while unsuccessful projects had a function mean o f -.504.
Table V-42
Standardized Coefficients and Correlations of Predicl or Variable V43
Variable
Standardized
coefficients
V43 Role of champion
1.000
1.000
212
Hypothesis VIII is supported. A project champion is essential to project
success.
model of one predictor (Did a champion play a significant role in the project V43)
that significantly predict on-time project completion, R2=.231, R2adr-231,
Table V-43
R
.481
R Square
.231
df
Sum of Squares
.172
Adjusted R
Regression
1
7.616
Square
Standard
1.396
Residual
13
25.317
Error
F=
3.911
Sig F = .070*
Variable
SE B
Beta
t
Sig t
(constant)
5.760
1.086
5.303
.000***
V43
-1.048
.530
-.481
-1.978
.070*
* p < .10** p < .05 ***<.01
213
Interpretation of these results indicate that a champion who plays a

significant role in the implementation is related to on-time project completion.
generated one function that was not significant
model of one predictor (V43) that significantly predicts on-time project
completion, R2=.325, R2adj=-277, F(1 ,14,)=6.755, p<.05. This model accounts for
32.5% of the variance in on budget project completion. A summary of the
Table V-44
R
.570
R Square
.325
df
Sum of Squares
.277
Adjusted R
Regression
1
8.381
Square
1.114
Standard
Residual
14
17.369
Error
F=
Sig F = .021**
6.755
SE B
Variable
Beta
t
Sig t
(constant)
5.505
.865
6.361
.000***
V43
-1.099
.423
-.570
-2.599
.021**
**p < .05 ***<.01
214
A discriminant analysis was conducted to determine the ability of the three
variables, V43 through V45, to predict on budget project completion. For

budget group. The analysis generated one function, which was not significant.
Hypothesis IX. Managements effectiveness in reducing user resistance is
positively related to project success.
The four independent variable used to examine this hypothesis are:
V46
Table V-45
W hat was the level of user resistance during the ERP implementation project?
Average - Most users referred to the system as your system throughout the
implementation process.
V47

(1)
(2)
(3)
(4)
(5)
What was the level of management awareness of user resistance during
implementation?
Average- Management aware of less than half of the user resistance
problems.
V48

(1)
(2)
(3)
(4)
(5)
How well did management communicate the need for a new system?
Average - Management only addressed about half the needs for a new
system.
V49

(1)
(2)
(3)
(4)
(5)
How effective was management in reducing user resistance?
Average - Management was able to reduce user resistance by half.
(1)
(2)
(3)
(4)
(5)
215
Table V-46 will show the results of the t-test of the successful and
unsuccessful implementations. Variables V46 through V49 will be examined for
significant differences in their mean values at the .05 level.
Table V-46
T-test for Variables V46 through V4S
Variable
Number
Mean
Standard
t-value
Degrees
deviation
of
of cases
Freedom
V46 Level Of User Resistance
.444
14
Successful
8
3.13
1.126
Unsuccessful
8
2.88
1.126
V47 Management Awareness of User Resistance
.882
.383
15
Successful
9
3.56
Unsuccessful
8
3.38
1.061
V48 Management Communication of Need for System
3.67
15
Successful
9
.866
1.051
Unsuccessful
8
3.38
1.246
V49 How Effec live Was Management In Reducing User Resistance
9
3.44
.527
1.013
15
Successful
Unsuccessful
8
3.00
1.195
1-tail
probability
.332
.385
.155
.164

the independent variables, V46 through V49, predicting ERP implementation
project success (V101). No significant models were generated.
A discriminant analysis was conducted to determine whether any of the
independent variables, V46 through V49, could predict success or failure. One
function was generated by the analysis, but the function was not significant.
Hypothesis IX is not supported by survey data.
216

model of one predictors (managements effectiveness in reducing user resistance
-V 4 9 ) that significantly predicts on-time project completion, R2=.427, R2adj=-383,
presented in Table V-47
Table V-47
R
.653
R Square
.427
df
Sum of Squares
Adjusted R
.383
Regression
1
14.052
Square
Standard
1.205
Residual
13
1.452
Error
F=
9.674
Sig F = .008***
3 in the Equati
Variable
B
SE B
t
Beta
Sig t
(constant)
6.271
7.140
1.139
.000***
V49
-1.065
.342
.-.653
-3.110
.008***
* p < .1 0 **p < .05 ***<.01
Interpretation of these results indicate that more importance placed on

training, giving business process training in the chartering, shakedown and
onward and upward phases of the project, high quality of training and no or low
use of testing are factors leading to on-time project completion. The finding of no
or low use of testing was the opposite of what the researcher expected.
217

generated one function that was not significant.
On budget project completion. Regression results did not produce a
significant model and discriminant analysis did not generate a significant
function.
Hypothesis X. The use of a steering committee that:

a.) is headed by the CEO or equivalent executive and
b.) meets at least every four weeks
is positively related to implementation project success.
shown below.
218
V50
Table V-48
How often was the project reviewed by the senior business unit
manager?
Weekly - bi-weekly - monthly - longer - not at all
(1)
(2)
(3)
(4)
(5)
V51
V52
Was a steering committee used to review the system implementation

progress?
Yes
No
(1)
(2)
If a steering committee was used, did the President/CEO/General
Manager head it?
Yes
(1)
V53
If a steering committee was not used, was any other control mechanism
outside of the project team used?
Yes
(1)
V54
No
(2)
No
(2)
Were project costs monitored during the course of the project?

Yes
(1)
No
(2)
unsuccessful implementations. Variables V50 through V54 were examined for
significant differences in their mean values. V52 indicates whether the steering
committee was headed by the president, CEO or General Manager. Steering
committees of successful firms were frequently headed by the top officer, while
the committees of unsuccessful firms tended not to be headed by the president,
CEO or General Manger. The difference in means is significant at the p<.10
level. V53 was only answered by firms indicating a steering committee was not
used. V53 indicates a significant difference in means at a p<.10 level with
219
unsuccessful firms not using any control mechanism to replace the steering
committee.
Table V-49
Mean
Standard
t-value
Number
of cases
deviation
Degrees
of
Freedom
V50 Frequency of project review by senior business unit manager
Successful
9
3.00
.000
15
1.000
Unsuccessful
8
3.00
1.069
V51 Was Steering Commi ttee Used ?
Successful
9
1.33
.500
-.169
15
Unsuccessful
8
1.38
.518
V52 President/CEO/GM head steering commitl ee
-1.387
11
Successful
6
1.50
.548
7
Unsuccessful
1.86
.378
V53 Other Con trol Mechanism
2
4
Successful
1.50
.707
-1.633
4
Unsuccessful
2.00
.0
V54 Monitor Project Costs
1.11
Successful
8
.333
-.083.
15
.354
Unsuccessful
8
1.13
*p< 10
Variable
1-tail
probability
.500
.434
.097*
.089*
.468

the independent variables, V50 through V54, using V101 as the continuous
dependent variable. No model was found significant.
A discriminant analysis was conducted on the independent variables to
determine how effective these variables can correctly classify successful and
unsuccessful implementations. One function was generated but was not
significant.
Hypothesis X is not supported by the survey data.
220
On-time and on/under budget.

the accuracy of the independent, variables V50 through V52 and V54, predicting
on-time project completion and on-budget projects.
model of two predictors (use of a steering committee -V51 and monitoring
project costs-V54) that significantly predict on-time project completion, R2= .482,
R2adj=-367, F(2,9,)=4.186, p<.10. This model accounts for 48.2% of the variance
in on-time project completion. A summary of the regression model and bivariate
Table V-50
R
.694
.482
R Square
df
Sum of Squares
.367
Adjusted R
Regression
2
12.650
Square
1.229
Residual
Standard
9
13.600
Error
F=
4.186
Sig F = .052*
3 in the Equati
B
SE B
Variable
Beta
T
Sig t
(constant)
1.600
1.454
1.100
.300
V51
-2.800
1.289
-.706
.058*
-5.966
V54
1.738
.934
5.000
2.876
.018**
* p < . 10 ** p < .05 ***<.01
221
Interpretation of these results indicate that not using a steering committee
and monitoring project costs are factors leading to on-time project completion.
The finding of the use a steering committee leading to late implementations was
the opposite of what the researcher expected. The processes of the steering
committee of planning, building consensus, resolving problems, and reducing
user resistance may cause delays in timely project completion. These processes
may, however, be an important factor in successful project implementations
using the broader DeLone-McLean definition of project success.
variables, V50 through V52 and V54, to predict on-time project completion. For
generated one function that was not significant.
model of one predictor (review of project by senior manager-V50) that
significantly predicts on-time project completion, R2=.271, R2adj=-205,
F(1,11,)=4.087, p<.10. This model accounts for 27.1% of the variance in on
budget project completion. A summary of the regression model and bivariate
222
Table V-51
Multiple Regression Results of Variables V50 through V52 and V54 with V13
R
.520
R Square
.271
df
Sum of Squares
Regression
1
Adjusted R
.205
5.626
Square
11
Standard
1.173
Residual
15.143
Error
F=
4.087
Sig F = .068*
5 in the Equati
Variable
B
SE B
Beta
t
Sig t
(constant)
.905
1.232
.734
.478
V50
.857
.306
.520
2.022
.021**
*p<.10 * * p < . 05 ***p<.0'
Interpretation of these results indicate that the more frequently the project
is reviewed by senior management the more likely the project will be completed
on budget. This finding suggests that senior management is likely to focus more
attention on the cost of the project than the steering committee. If the senior
manager is not directly involved in the steering committee, cost may be the only
aspect of the project that he or she is interested in controlling.
seven variables, V50 through V52 and V54, to predict on budget project
completion. For purposes of this test a variable, V13r, was defined classifying all
cases reporting their ERP projects were completed under budget or 10% or less
over budget as the on budget group and all cases more than 10% over budget as
the over budget group. The analysis generated one function that was not
significant.
A summary of the statistical analysis of hypotheses 1 through 10

Table V-52 Summary of Statistical Analysis of Hypotheses
224
Six Dimensional Model
V100
V101
V100
On-Time
V12
V12r
On Budget
V13r
V13
t-test regressior discriminant regression discriminant regression discriminant
|V17 IS exec understand business obj.

nizin
|V20b Proj. Mgr. time in project phase

|V20d PM time in onward/upward ph
V22 Importance of ERP vs other goals
V25 % of group time on Project
Staffing
4
V27 Years of ERP exp
V29 Motivation level of PM
H5
V32a Bus proc training- chartering ph
V32c Bus Proc trainmg-shakedown
32d B
V33 Timing of training
Quality of training
Repeating of training
c itt
V37 Budget spent on training

|V38a W as a consultant used
| Leading
|V43 Role of champion
V49 Mgr effective reducing resistance
trolling
Review by senior manager
V51 Use of steering committee

comm
IV53 Other control mechanism
omtor cos
| Note' H5 discriminant analysis results of <.11 (actually .108) are generally regarded as less than statistically
significant, but w e re close to significance and are presented to indicate the likelihood of some relationship.
11
225
OTHER FINDINGS
COMPANY GOALS
Independent variables V14a1 through V14g2 examine the company
specific goals for undertaking an ERP implementation. The individual goals are
listed in Table V-53:
Variable
V14a1
V14b1
V14c1
V14d1
V14e1
V14f1
V14g1
Table V-53
Company Specific Goals for ERP Implementation (V14)
Goal
Reducing systems operating costs
Solving Y2K or other specific problems
Solving maintenance problems with legacy systems
Accommodate business growth
Improve business processes or standardize data
Reduce inventory carrying costs
Eliminate delays in filling customer orders
The means and frequency distribution of the responses is shown in Table

V-54.
Table V-54
Company Specific Goals (V14)
V14a1. Reducing system operating costs
Value Label
Value
Frequency
Yes
1
2
No
Total
Mean
1.41
V14a2. Reducing system operating costs
Value Label
Fully achieved
Mostly achieved
Some improvement
No change or worse
Total
Value
10
7
17
Std Dev
Frequency
1
2
3
4
Percent
58.8%
41.2%
100%
.507
Percent
3
5
1
1
30.0%
50.0%
10.0%
10.0%
10
100%
226
Mean
2.00
V14 b1. Solving Y2K or other specific problems
Value Label
Value
1
2
Frequency
7
Yes
No
Total
Mean
1.59
V14b2. Solving Y2K or other specific problems
Value Label
Std Dev
Percent
41.2%
58.8%
100%
.507
10
17
Std. Dev
Frequency
Value
.943
Percent
1
6
Fully achieved
2
1
Mostly achieved
Some improvement
3
0
4
No change or worse
0
Total
7
Mean
1.14
Std Dev
V14 c1. Solving maintenance problems with legacy systems
Value Label
Value
Frequency
85.7%
14.3%
100%
.378
Percent
Yes
1
12
No
2
5
Total
15
Mean
1.29
Std. Dev.
V14 c2. Solving maintenance problems with legacy systems
Value Label
Value
Fully achieved
1
Mostly achieved
2
Some improvement
3
No change or worse
4
Total
Mean
1.42
V14 d1. Accommodate business growth
Value Label
Value
Value
Percent
58.3%
41.7%
5
0
0
12
Std. Dev.
Frequency
Yes
1
No
2
Total
Mean
1.18
V 14d2. Accommodate business growth
Value Label
Frequency
7
70.6%
29.4%
100
.470
100%
.515
Percent
14
3
15
Std. Dev
Frequency
82.4%
17.6%
100%
.393
Percent
Fully achieved
1
5
2
6
Mostly achieved
Some improvement
3
3
4
No change or worse
0
Total
14
Mean
1.86
Std. Dev
V14 e1. Improve business processes or standardize data
Value Label
Yes
Value
Frequency
1
35.7%
42.9%
21.4%
100%
.770
Percent
15
88.2%
227
No
2
2
Total
15
Mean
1.12
Std. Dev.
V14 e2. Improve business processes or standardize data
Value Label
Value
Fully achieved
1
Mostly achieved
2
Some improvement
3
No change or worse
4
Total
Mean
2.20
V14 f1 . Reduce inventory carrying costs
Value Label
Value
Value
Percent
8
5
13.3%
53.3%
33.3%
13
Std. Dev.
100%
.676
Frequency
Yes
1
No
2
Total
Mean
1.35
V14 f2. Reduce inventory carrying costs
Value Label
Frequency
2
11.8%
100%
.332
Percent
11
6
15
Std. Dev.
Frequency
64.7%
35.3%
100%
.493
Percent
Fully achieved
1
1
Mostly achieved
2
4
Some improvement
3
6
4
No change or worse
0
Total
11
Mean
2.45
Std. Dev.
V 14g1. Eliminate delays in tiling customer orders
Value Label
Value
Frequency
9.1%
36.4%
54.5%
100%
.688
Percent
Yes
1
8
No
2
8
Total
16
Mean
1.50
Std. Dev.
V 14g2. Eliminate delays in filling customer orders
Value Label
Fully achieved
Mostly achieved
Some improvement
No change or worse
Total
Mean
Value
1
2
3
4
2.50
Frequency
2
50.0%
50.0%
100%
.516
Percent
1
4
1
8
Std. Dev.
25.0%
12.5%
50.0%
12.5
100%
1.069
A backward multiple regression was conducted to determine which

independent variables, V14a1 through V14g1, were predictors of ERP
implementation project success. Regression results indicate an overall model of
228
three predictors (eliminate delays in filling customer orders-V14g1, accommodate
business growth-V14d1, and improve business processes or standardize dataV14e1 - that significantly predict ERP implementation project success, R2=.452,
R2adj=-316, F(3, 12,)=3.306, p<.10. This model accounted for 45.2% of the
variance in ERP project success. A summary of the regression model is shown
in Table V-54. The results suggest that firms embarking on an ERP
implementation are more likely to be successful if the goal of the project is to
accommodate business growth, improve business processes or standardize
data, or eliminate delays in filling customer orders. Reducing systems costs
(V14a1), solving specific Y2K problems or other specific problems (V14b1), and
solving maintenance problems with legacy systems (V14c1), and reducing
inventory costs (V 14f 1) are not significantly associated with project success.
Table V-55
Mul tiple Regression Results of Variables V14a1 through V14g1
.67
Multiple R
R Square
.452
df
Sum of Squares
Adjusted R
.316
Regression
3
3.190
Square
Standard
.5672
Residual
12
3.861
Error
F=
3.306
Sig F =
.057*
Variable
Constant
V14d1
V14e1
V14g1
B
5.340
1.231
-1.500
-.776
SE B
Beta
.695
.613
.613
.802
-.547
-.584
.306
*p<.10 p<.05
T
7.687
2.009
-1.870
-2.532
SigT
.000
.068*
.086*
.026**
229
COMPETITIVE ADVANTAGE
Variable V55 asked the respondent if the completed ERP implementation
provided the firm with a competitive advantage over other firms in its industry. A
t-test was conducted. A significant difference in means between successful
cases and unsuccessful cases was shown.
Variable
Successful
Unsuccessful
Multiple R
R Square
Adjusted R
Square
Standard
Error
Variable
Constant
V55
Number
of cases
Table V-56
T-test for Variable V55
Mean
Standard
t-value
deviation
Degrees
of
Freedom
V55 ERP created competi tive advantage
12
1.38
-2.928
8
.518
6
.000
2.00
** p<.05
1-tail
probability
.007**
Table V-57
Multiple Regression Analysis Results of Variable V55
.663
.439
df
Sum of Squares
.392
Regression
1
2.690
.5350
B
5.487
-.915
Residual
12
F=
9.399
Sig F =
.010**
SE B
Beta
.511
.298
-.663
*p<.10 **p<.05
T
10.745
-3.066
SigT
.000
.010**
.286

the independent variable, competitive advantage (V55), predicting project
230
success. Regression results indicate that the model significantly predicts project
success, R2=.439, R2adj=-392, F(1, 12,)=9.399, p<.05. This model accounts for
43.9% of the variance in project success. A summary of the regression
coefficients is presented in Table V-57.

A discriminant analysis was conducted to determine whether project
success (V100) could predict competitive advantage. One function was
generated and was significant, A = .583, X 2 (1, n=14) =6.198, p<.050, indicating
that the predictor significantly differentiated between firm indicating competitive
advantage from ERP and those not indicating competitive advantage.
Standardized function coefficients and correlation coefficients (Table V-58) show
that the single variable, success or failure, is associated with the function.
Original classification results demonstrated that 100.0% of companies reporting
competitive advantage were correctly classified, while 66.7% of firms not
reporting competitive advantage were correctly classified. For the overall
sample, 78.6% were correctly classified. Cross-validation derived 78.6%
accuracy for the total sample. The means of the discriminant functions are
consistent with these results. Companies reporting competitive advantage had a
function mean o f-1.050, while companies reporting no competitive advantage
had a mean of .583. These results suggest that firms with successful ERP
projects are likely to be classified as firms reporting competitive advantage.
231
Table V-58
Standardized Coefficients and Correlations of Predictor Variable V100
Standardized
Variable
coefficients
V100 Successful /
1.000
1.000
unsuccessful
PRIOR MAJOR SYSTEMS IMPLEMENTATION EXPERIENCE

V56 and V56a determine whether the respondents company had
experience implementing any other major systems prior to the ERP
implementation. This question explores the issue of organizational learning.
Does prior experience implementing a complex system lead to probability of a
successful ERP implementation?
Table V-59
Prior Major Systems Experience (V56)
Variable
Number Mean
Standard
t-value
Degrees
of cases
deviation
of
freedom
V56 Prior major systems implementation
.354
.738
13
Successful
8
1.88
7
1.71
Unsuccessful
.488
1-tail
probability
.237
A t-test shows no significant difference in response means between firms

grouped as successful and those grouped as unsuccessful.
Standard regression was conducted to determine if independent variable,
V56, was a predictor of ERP implementation project success. No model was
generated which was significant.

independent variable, V56, to predict ERP project success. One function was
generated which was not significant.
Prior major systems implementation does not predict ERP implementation
project success.
CHAPTER VI
CONCLUSIONS
This chapter analyses the quantitative results from the survey information
presented in Chapter V and the qualitative results of the case studies described
in Chapter IV.
The findings of the survey and cases described in this study provide
management of firms implementing ERP systems or planning to implement ERP
systems projects with a better understanding of the underlying factors leading to
successful implementation. Each major hypothesis is discussed.
In addition to determining which of the ten hypotheses are associated with
successful implementations, this chapter discusses other findings of the study on
company goals and the relationship of the ten hypotheses to on-time and on
budget project performance.
Finally significance of the findings to practitioners, limitations of the study
and suggestions for further research are presented.
CONCLUSIONS ON THE HYPOTHESES

PLANNING
Hypothesis I
The level of integration of IS planning and business planning is
233
234
The first hypothesis was that a higher level of integration of business

planning and IS planning leads to implementation project success. Confirmation
of this hypothesis would indicate that ERP systems are a vital concern of the
entire organization and not a concern of the IS department or another functional
area.
The case studies do not support hypothesis I. The cases demonstrate
that lower degrees of integration also result in successful implementations. The
hypothesis was tested by inquiring about and observing the level of integration
between business planning and information technology planning in the case
study organizations at the time of the implementation. The framework shown in
Table VI-1 was used to classify the responses of each case in the framework of
integration levels. Six of the eight cases are classified as reactive planning,
where IS reacts to the business plan but has no input. Two cases indicate linked
planning. None of the cases can be classified as integrated planning where the
business planning and IS planning are indistinguishable from one another.
Questionnaire responses indicated no significant difference in level of
integration of business planning and information technology planning between
successful and unsuccessful implementations. The mean for successful
implementations was 3.0. Reactive planning was coded 3. Although the
difference was not statistically significant, less successful projects rated their
level of integration slightly higher at 3.33, closer to linked planning. These
235
results, although not statistically significant, are the opposite of what the
hypothesis predicts.
Tablei VI-1
Levels of Business Planning and IT Planning Integration
Level of Integration
Case
No planning: No formal business
planning or ERP systems planning
Stand-alone planning: Presence of
either business plan or ERP systems
plan, but not both.
Reactive planning: ERP systems
Pacific Clay
function reacts to business plan but
Smith Bits and Services
has no input in the business planning M-l
process.
Litton Industries
Kenmex
Northrop Grumman
Linked planning: Business planning is Pacific Aerospace
Halliburton
interfaced with ERP systems
planning. Systems resources are
Integrated planning: Business
planning is indistinguishable for ERP
systems planning. They occur
simultaneously and interactively.
Although the hypothesis was not supported, some important information
was gathered. The case studies indicated that several organizations increased
their integration of business planning and information systems planning following
the ERP implementation. One case indicated that a higher awareness of
possible co n trib u tio n s o f IT to org a n iza tio n a l su cce ss in crea sed th is integ ra tion.
Other questionnaire items indicated that in both successful and

unsuccessful implementations business executives and information systems
236
executives share a common vision of the role and contribution of IT to the

organizations mission (V16). Responses averaged 3.67 for successful
implementations and 3.63 for unsuccessful implementation where 4.0 indicated
agreement and 3.0 indicated no opinion. No statistically significant difference
was found between successful and unsuccessful implementation projects.
However, executives sharing a common vision of the role and contribution of IT
was related to on-time project completion and on/under budget project
completion.
All survey respondents agreed that IS executives understand current
business objectives (V17). Responses averaged 4.0 for both groups, where 4.0
indicated agreement. No difference within groups was found. However, the
understanding of business objectives by IS executives was found to be related to
on-time project completion.
Respondents differed on the question concerning business executives
understanding current IT objectives (V18). Successful implementations indicated
a mean response of 3.22, where 3.0 indicated no opinion and 4.0 indicated
agreement. Unsuccessful implementations averaged 3.75, closer to agreement
(4). This data is opposite to what the literature predicts although the results were
not statistically significant (p =.112).
H yp oth esis I is not confirm ed by e ith e r the case stu d ie s o r th e su rve y
data.
organizing
237
Hypothesis II
Organizing the ERP implementation project under the direction of a
project manager whose sole responsibilities are project implementation is
Many authors support the use of a dedicated project manager.

Confirmation of this Hypothesis II would encourage management to establish a
full time project manager function, rather than assign the project management
tasks as a part time task to another manager.
This hypothesis is supported by the case study data. Project managers at
Smith Bits and Smith Services, M-l, Halliburton, and Kenmex were full time and
the projects were successful. Northrop Grumman and Litton project managers
spent about 75% of their time on the project. In the case of Pacific Clay project
managers continued significant non-project responsibilities and the project was
not successful in terms of on-time and on-budget measures and performance
improvement measures although it did meet managements limited expectations
of replacing legacy systems. At Pacific Aerospace and Engineering the project
manager had other duties but spent the majority of his time on the project. Since
the PAE division was small and in almost a startup mode, the implementation
was successful with less than a full-time project manager.
Questionnaire responses indicate both successful and unsuccessful
implementations used a full time project manager (V19), resulting in a 1.11 mean
238
for successful projects and a 1.13 mean for unsuccessful projects, where 1=yes
and 2=no. The difference in means is not statistically significant.

No significant differences between successful and unsuccessful
implementations were found in the project managers percentage of time spent in
the chartering phase (V20a), project phase (V20b) or onward and upward phase
V20d). During the project phase, project managers for both successful and
unsuccessful projects averaged approximately 80% of their time managing the
implementation project. Project managers of unsuccessful projects spent a
higher percentage of their time in the shakedown phase (V20c) than managers of
successful projects, 82.5 percent of their time for unsuccessful projects versus
49.3 percent for successful projects. This difference is significant at the p<.10
level. Implementation problems apparently required more time in the shakedown
phase, which is the phase in which the systems is stabilized, bugs eliminated and
normal operations commence. This observation appears reasonable if difficulties
were experienced in the project.
The percentage time spent by project managers during the project phase
was related to project success in the regression analysis, while the amount of
time spent by project managers in the shakedown phase was inversely related to
success.
The authority of the project manager was rated above average by both
successful and unsuccessful projects. Project managers for both successful and
unsuccessful implementations had the authority to accept or reject team
239
members, 1.22 for successful and 1.25 for unsuccessful implementation, where
1=yes and 2=no.

A full time project manager is used by successful ERP implementations,
but does not assure project success. Both successful and unsuccessful projects
used a nearly full-time project manager.
Hypothesis II is not supported.
Hypothesis III
An organizational structure in which the Project Manager reports
directly to the business units senior manager is positively related to
project success.
Confirmation of this hypothesis will indicate the real or perceived support

of the top executive is essential for project success.
Hypothesis III was not fully supported in the case studies. In most cases
the project manager reported to a steering committee or member of the top
management team, but not the CEO, president or general manager. In two
smaller companies, Pacific Aerospace and Engineering and Pacific Clay
Products, the project manager did report to the CEO.
Survey results indicate an average reporting level for both successful and
unsuccessful implementation, which is between the CEO/General Manager and
Department Manager. 41.2% of the respondents reported to the CEO/General
240
Manager level while 52.9% reported to a department manager. 5.9% reported to
the Board of Directors. No significant difference was determined between

successful and unsuccessful project in reporting levels. Successful projects
reported a mean of 2.56, where 3= CEO/General Manager and 2=Department
Manager. Unsuccessful projects reported a mean of 2.38, not a significant
difference.
In the case studies project managers reported to CEO/General
Manager/Top Management Team in 3 cases, CIO in 3 cases, and steering
committee in 2 cases.
Hypothesis III, the literature claim that the project manager should report
to the business units senior manager, is not supported. Reporting to a member
of top management either directly or a steering committee headed by a member
of top management is supported by the case studies and survey, but is used by
both successful and unsuccessful projects.
The amount of time the project group spent solely on the implementation
project was significantly greater for unsuccessful projects than for successful
projects. This result in the opposite what was anticipated. Apparently, more
successful implementations place less demands on the project team because
these projects encounter fewer problems. Another possible explanation would
be the successful projects devote more personnel to the project requiring less
effort from each member.
241
Senior management support was rated significantly higher in successful
implementations than in unsuccessful project. This finding indicates that

although the senior manager may not lead the project, his or her support will
increase the chances for project success.
STAFFING
Hypothesis IV
Staffing the project manager position with an individual with
extensive ERP implementation and project management experience is
or
project management experience, combined with strong motivation are related to
project success. ERP implementation and project management experience were
both important in all the cases. In some cases project managers without prior
ERP experience gained ERP experience during the implementation.
Survey results indicate that for successful ERP implementations project
managers have over 2 years of ERP experience. For unsuccessful
implementations project managers have between 0 and 2 years experience.
These differences in means are significant at the p<.01 level. The hypothesis is
supported with respect to ERP experience.
No significant difference in project management experience with both
successful and unsuccessful projects reporting over two years experience. The
hypothesis was not confirmed with respect to project management experience.
242
Despite this finding, personnel participating in the case studies mentioned and
valued the project management experience of their project managers. Project

management experience was found to be related to on-time and on/under budget
project completion.
Respondents reported on the survey that project manager motivation to
succeed in the implementation project as between above average and high for
both successful and unsuccessful implementations.
Firms can use financial or other incentives to motivate the project
manager toward a successful project. Only 20 percent of survey respondents
indicated any monetary or non-monetary rewards were promised to the project
manager. The t-test indicated a significant difference in use of incentives
between successful and unsuccessful companies. The absence of rewards
promised to project managers was significantly related to project success in the
regression results (p <.01) and was a variable entering the discriminant function
that significantly predicted (p<.05) grouping projects as successful or
unsuccessful.
Among the case studies only Halliburton extended bonuses to project
participants in accordance with company-wide bonus incentive programs.
Bonuses were paid in the M-l implementation case but were not promised by
management or expected by team members.
While not used frequently, financial rewards and other non-monetary
incentives are associated with unsuccessful projects. Formal rewards in
243
management control systems, such as salary increases, bonuses and

promotions, do not improve the prospects of project success. This finding
suggests that informal rewards, such as recognition, status and an intrinsic sense
of accomplishment, may play a much larger role in successful ERP
implementation projects than formal rewards. Project managers in the case
studies did not mention compensation or other rewards. These managers were
just doing their jobs and wanted to be recognized for an job well done.
Management should consider a program of recognition of key personnel in the
implementation efforts.
Hypothesis V
A. The quantity and quality of training is positively related to
B. The use of testing, together with training, is positively related to
This hypothesis tests the claim that level of training, quality of training,
type of training and the use of testing are related to project success. The results
of these questions should inform management about the importance of adequate
training to implementation success. Training is often reduced as a result of time
or budget overruns.
Over 88% of survey respondents reported the importance placed on
training as above average (64.7%) or high (23.5%). Case study results confirm
244
the importance of training. No significant difference on the importance placed on
training was determined between successful and unsuccessful projects.

Most respondents indicated that the project provided both software
training and business process training. Fifty-six percent of respondents indicated
business process training in the chartering phase. Eighty seven percent
provided this training in the project phase. Fifty-eight percent provided it in the
shakedown phase and forty-six percent in the onward and upward phase. While
the majority of respondents conducted business process training, no significant
difference was determined between successful and unsuccessful projects.
Successful firms reported a significantly higher level of training quality
during the implementation phase and significantly more spending on training.
Training quality was reported as between average and above average by
successful firms and average by unsuccessful firms. Successful firms spent
over 10% of their project budget on training while unsuccessful firms spent less
than 10%.
Timing of training varied. Approximately 30 percent of firms began
training 3-4 weeks before start up, 30 percent 5-6 weeks before start up and 35
percent over 6 weeks before start up. No significant difference in start up of
training was detected between successful and unsuccessful implementations.
The discriminant analysis conducted to determine the ability of the training
variables to predict successful or unsuccessful projects generated one function
245
composed of all ten training variables. Unfortunately the function significance

was p=.108, just above an acceptable level of significance (p<.10).
Testing was used frequently to verify retention of training materials by
only 17 percent of respondents. Testing was used sometimes buy 17 percent
and rarely by 35 percent. Twenty-nine percent never used testing. No
significant difference in the use of testing was determined between successful
and unsuccessful projects. This result is the opposite of that found by Sneller in
his MRP study.
Combining the case study finding and the survey findings the hypothesis
that quantity and quality of training is related to project success is supported.
Hypothesis VI
Use of an ERP consultant for guidance in the system
implementation process is positively related to implementation project
success.
This hypothesis examines the relationship between the use of a consultant

and project success. The results of this question should help inform
management if the substantial amount spent each year on ERP consultants is
worth the expense.
The use of consultants represents a large portion of the expenditures on
ERP implementation. Eighty-eight percent of the survey respondents used
246
consultants on the project. In 35% of the projects the consultant was used as
project manager. In 80% of the implementation projects the consultant was a
firm rather than individual.
Consultant use during the chartering phase averaged 49.6% of the time
for this phase. The average was 58.1% for the project phase, 38.8% for the
shakedown phase, and 25.0% for the onward and upward phase. Successful
implementations use of consultants during the project phase averaged 77.5%,
while unsuccessful projects use of consultants during this phase averaged 41.1.
This difference is significant at the <.10 level. These finding differed from Sneller
(1986) who found no significant relationship between the use of consultants and
MRP implementation success.
Survey respondent reviewed consultant impact on the project as favorable
in 80% of the projects and very favorable in 7% of the projects. Impact was
reported as unfavorable in 13% of the projects. No significant difference was
observed in project impact between successful and unsuccessful projects. All
case studies using consultants reported favorable contributions to the project.
Hypothesis VI is not supported. However, both by the case studies and
survey data indicate a strong positive contribution to the project by consultants in
both successful and unsuccessful projects.
Hypothesis VII
CEO involvement in the planning and implementation of ERP
systems is positively related to implementation project success.
247
CEO involvement is often interpreted as an indicator of the importance of

a project to the organization. This hypothesis examines the relationship between
CEO involvement and project success.
Survey respondents reported General Manager/President involvement as
average in 53% of the projects and above average in 25% of the projects.
Involvement was low or below average in 17% of the projects. Average is
defined as occasional review of implementation progress with department heads.
General manager/president involvement was rated a mean of 3.0, average, in
both successful and unsuccessful implementations.
Case studies indicate that in most instances the involvement amounted
to project approval and occasional review of progress and budgets. Only in one
case did involvement rise above that level. At Kenmex, Case 7, the division
manager knew each task and understood every phase and component of the
project.
Hypothesis VII is not supported by the case studies or survey data.
Clearly the approval and support of the CEO is essential to any projects.
Involvement beyond project approval and occasional review is not required in
successful implementations. Case studies indicated that although the CEO may
not be significantly involved, some member or members of the top management
team are actively involved in the project or the steering committee.
248
Hypothesis VIII
The existence of a champion is positively related to implementation
A champion can often generate support for a project and help surmount
obstacles. This hypothesis examines the relationship between the existence of a
champion and ERP project success. Confirmation of this hypothesis should
encourage management to seek out and encourage project champions.
Survey respondents reported champions played a very significant role in
29% of the projects and a significant role in 53% of the projects. In 62% of the
projects the champion was a member of senior management. In 38% of the
projects the champion was from middle management. No cases reported a
champion from lower level management.
Thirty-one percent of the projects reported the champion as very
effective in reducing user resistance. Fifty per cent reported the champion as
slightly effective and 14 per cent indicated the champion was ineffective or had
no effect. Responses from companies classified in the successful group
indicated a mean response of 2.11, between very significant (3) and
significant (2), while unsuccessful groups reported a mean of 1.63, between
not important (1) and significant (2). The difference is statistically significant
(p=.079) and indicates champions are likely to be important to project success.
249
Multiple regression analysis found the role of the champion related to

project success, accounting for 27.8% of the variance. Discriminant analysis
found the role of the champion a significant predictor of project success,
however, only 58.8% of the cases were correctly classified using the model.
Case studies confirmed the importance of the role of the champion. Smith
Bits and Services, M-l, Litton, Halliburton, and Kenmex reported champions
played a significant role. Pacific Clay Products lacked a champion as it struggled
with its implementation. Pacific Aerospace also did not report the effects of a
champion, but in such a small implementation the project manager likely
performed the role of the champion.
This hypothesis is supported by case study data and survey data.
Druckers remarks that everything new gets into trouble. And then it needs a
champion (Drucker, 1999), are confirmed with respect to ERP implementations.
Hypothesis IX
Managements effectiveness in reducing user resistance to change is
Organizations often resist change. ERP systems usually result in

significant organizational change by requiring the organization to adopt practices
supported by ERP software, which may be different than existing practices.
250
Managements effectiveness in dealing with resistance to change may be a

significant factor in project success.
The level of user resistance during the project was reported as average in
25% of the projects, below average or low in 37% of the projects and above
average or high in 37% of the projects. No significant differences were observed
in response means between successful and unsuccessful project groups. In the
case studies user resistance was reported high at most of the companies
studied.
Managements awareness of user resistance was reported as high or
above average by 38% of respondents and as average by 47%. No
significant differences were observed in response means between successful
and unsuccessful project groups.
Managements communication of the need for ERP was rated high or
above average by 53% of respondents. Twenty-nine per cent rated
management as average, while seventeen per cent rated management below
average or low. No significant differences were observed in response means
between successful and unsuccessful project groups.
Managements effectiveness in reducing user resistance was rated as
high or above average by 35% of respondents, average by 53% and below
average or low by 11%. No significant differences were observed in response
means between successful and unsuccessful project groups.
251
Hypothesis IX is not supported by case or survey data. However, most
successful and unsuccessful implementations experienced average or higher

levels of management effectiveness at reducing user resistance.
Hypothesis X
The use of a steering committee that:
A. is headed by the CEO and
B. meets at least every four weeks
is positively related to implementation project success.
Control of the ERP project can be a significant factor in project success.

The use of a steering committee can be an effective tool to monitor project
progress. Confirmation of this hypothesis should lead management to establish
a steering committee to monitor ERP implementation projects.
Senior management review the ERP project weekly in 12% of the projects,
bi-weekly in 12%, monthly in 53% and less frequently in 18%. In 64.7% of the
responding firms a steering committee was used. The CEO headed the steering
committee in only 31 % of the cases. Eighty-three per cent of firms not using a
steering committee reported no control mechanisms outside of the project team
were used. Project costs were monitored by 87% of the respondents.
Only one firm in the case studies, Halliburton, developed formal metrics to
measure the success of the ERP implementation project. Most of the firms
252
indicated the project was just something they had to do. Most did not attempt to
measure return on the investment even when the projects were finished on time
and on/under budget. Firms should consider establishing formal measures of
success before embarking on such a complex, expensive, and time consuming
project.
2. Additional Findings
Specific company goals. The survey questionnaire inquired about the
respondents goals for its ERP project. Companies stating goal of eliminating
delays in customer orders, accommodating business growth and improving
business process or standardizing data were related to project success. Other
possible goals such as reducing systems costs, solving specific problems (such
as Y2K), solving maintenance costs of legacy systems and reducing inventory
carrying costs were not associated with project success.
Prior systems experience examined but not a factor. Either companies
had not been involved in a major systems implementation or it was so long ago
that with personnel turnover, no benefit was gained.
4. Significance of the Findings
The significant findings of this research are summarized in three
categories:
Implementation management techniques used at successful firms,

but used less or not at all at unsuccessful firms. These findings
253
include the experience of the project manager, quality of training

and the role of the champion.
Practices consider in the literature to be essential, but which did not

differentiate successful projects from unsuccessful projects.
A.
Practices in the literature that were not supported by the data.

Implementation management techniques that are used by successful
firms but used less or not at all by unsuccessful firms. These findings include the
experience of the project manager and the role of the champion.
Project Manager. Choosing the right project manager can be critical to
project success. Managers of successful projects had more ERP experience
than managers of unsuccessful projects. The promise of monetary or non
monetary rewards is not useful to motivate project managers. Experience and
motivation of the project manager are also significantly related to on-time and on
budget project completion.
Training. Training was regarded as important by both successful and
unsuccessful projects. The importance placed on training was not significantly
different between the groups, although successful implementations rated their
training quality higher and spent more on training. Although barely missing
statistical significance, the ten training variables predicted whether a project
would be classified as successful or unsuccessful. Timing of training was the
variable with the largest effect. Seven of the training variables were significantly
related to on-time project completion and predicted whether a project would be
254
classified as successful or unsuccessful. Three training variables were related to
on budget project completion. While the statistical data is mixed, when combined
with case study analysis, training is critical to project success and very important
to on-time project completion.
Role of Champion. The use of a champion in a significant role is
important to project success. Implementations with a champion playing a
significant role were more successful than implementation without champions or
where the champions did not play a significant role.
B.
The second set of findings consists of those practices considered in
the literature to be essential, but the use of which does not separate successful
and unsuccessful firms. The practices may be essential, but are not sufficient to
result in project success. This set of findings includes: establishment of a project
headed by a project manager, training, use of consultants, and control of the
project by a steering committee.
Establishment of Project Headed by Project Manager. Both successful
and unsuccessful projects used formal project headed by a project manager.
The only significant relationship observed was that project managers of
unsuccessful projects spend more time on the projects during the shakedown
phase and on-ward and upward phase. Importance of ERP compared with other
organizational goal was related to on-time and on budget project completion.
Consultants. Both successful and unsuccessful implementations used
consultants and expressed belief that the impact of the consultants on the project
255
was favorable. In about half the cases the consultant served as the project
manager with no significant difference reported between successful and
unsuccessful firms. Successful firms did report heavier use of the consultant
during the project phase with successful firms using the consultants for about
77% of the time and unsuccessful firms using the consultants for 41%. No
significant regression or discriminant analysis results were determined.
Consultant use had no impact on on-time or on budget performance.
Steering Committee. Both successful and unsuccessful projects generally
used a steering committee to review the project. CEOs of successful projects
were more likely to head the steering committee than CEOs of unsuccessful
projects, but even among the successful group, only half were headed by the
CEO.
C.
The third set of finding consists of practices that are discussed in the
literature but no evidence was produced to support these recommendations.

This set of findings includes: integration level of business process and IS
planning, reporting level of PM, involvement of general manager, and role of
management in reducing user resistance.
Integration of Business Planning and IT Planning. The study did not
support the idea that higher levels of integration would lead to project success.
The case studies did indicate that after the project was complete a generally
higher level of Business Planning and IT Planning developed. The study also
found a relationship between the sharing of a common vision among IT and
256
business executives was related to on-time project completion and on budget

completion. IT executives understanding of business objectives was also a
factor in on-time project completion.
Reporting Level of Project Manager. The reporting level of the project
manager was not a factor in project success or on-time/on budget project
completion. The literature indicating the reporting relationship is an important
signal of the projects importance is not supported.
Involvement of General Manager. Successful and unsuccessful firms
reported the same level of general manager/president involvement and that level
amounted to occasional review of the implementation progress with department
heads. While top management support may be vital to a project, involvement is
clearly not required. Case study data and survey data agree on this conclusion.
Role of Management in Reducing User Resistance. No significant
differences were found between successful and unsuccessful implementations in
the effectiveness of management in reducing user resistance. The finding is
counter to the literature that top management support in necessary to reduce
user resistance. Manager effectiveness in reducing user resistance was related
to on-time project performance.
5. Practical Implications of the Conclusions.

This study began by examining the literature that exists on the
implementation of Enterprise Resource Planning systems. Much of this literature
contains recommendations that are untested and unstructured. Specific
257
recommendations were hypothesized and tested. These hypotheses were based
on classical management models - planning, organizing, staffing, leading and

controlling - and tested using case studies and a survey. The following
implementation practices are supported by the research.
Planning.
The hypothesis that higher levels of IT and business planning integration
are related to project success was not supported. The results, however, showed
that when IS and business executives share a common vision of the role of IT
and the contribution of IT to the organizations mission, projects are likely to be
completed on-time and on/under budget. Where IS executives understand
current business objectives, projects are likely to finish on/under budget.
Organizing.
Project headed by project manager. The use of a full time project
manager was supported. But nearly all successful projects and unsuccessful
projects used a full time project manager, indicating this practice does not assure
success. The higher the percentage of the project managers time spent on the
project during the project phase the more likely the project is to succeed.
Staffing.
Project Manager. Organizing the project using a project manager with
prior ERP experience will improve chances of project success. Prior project
management experience will help assure completing the project on-time and
on/under budget. Monetary or non-monetary rewards promised to the project
258
manager are not related to project success. Informal rewards such as

recognition and status should be encouraged.
ERP experience combined with project management experience, high
motivation and lack of monetary or non-monetary rewards are likely to result in
successful project completed on-time and on/under budget.
Training. Firms implementing ERP should place importance on training as
part of the project. Successful firms reported higher quality of training and spent
more on training. Training was also related to on-time project completion.
Timing of training and use of testing were related to on budget completion.
Consultants. Both successful and unsuccessful companies used
consultants. Use of consultants did not guarantee success, although firms using
consultant indicated a favorable impact on project success. The practice of using
consultants is supported.
Leading.
Champion. Organizations implementing ERP should identify and
encourage project champions. The existence of champions is related to project
success and to on-time and on/under budget project completion.
Controlling.
Steering Committees. The use of steering committees to control the ERP
implementation project is a practice of firms with successful and unsuccessful
projects. Steering committee use should be encouraged, although using a
steering committee does not assure success. Use of a steering committee was
259
related to on-time project completion. More frequent project review by senior

management and monitoring project costs were related to on/under budget
project completion. Firms where the president or general manager headed the
steering committee tended to be more successful than those who did not.
6. Limitations of the Study
This study is based on a sample survey. The information gathered using
this instrument is subject to the degree of understanding of the ERP
implementation project by the respondent as well as the care and accuracy of the
respondent. Response to the survey was less than expected. The receipt of
more responses could have changed the conclusions reached.
6. Suggestions for Further Research.
Additional CSFs. The list of potential CSFs examined in this study is not
exhaustive. Additional CSFs based on management theory may be identified in
future studies.
Contingency factors. Research should investigate the influence of factors
such as industry, firm size, and organizational structure. Flow does each of these
factors impact CSFs? This information will be useful as ERP implementations
are growing in small and medium sized firms and in non-manufacturing
environments.
Non-profit and governmental organizations. This study was conducted
with manufacturing firms. Non-profit and governmental organizations are
260
implementing ERP systems and experiencing problems. Are the CSFs the same
for these organizations as for manufacturing firms?

7. Lessons Learned
This study has examined recommendations from academic and
practitioner literature proposing methods to successfully implement ERP
systems. Methods with a foundation in classical management theory were
selected for examination. The results show that some of these propositions were
related to successful projects. Other recommendations were used by both
successful and unsuccessful projects indicating that their use did not guarantee
success. A few of these recommendations were not supported for either
successful or unsuccessful implementation projects.
In a management approach to critical success factors in MRP
implementations, Sneller (1986) concluded: There appears to be a lack of good
old fashioned management in the implementation approached used for projects
that were unsuccessful. American management has become very undisciplined
as society itself has become undisciplined. The results of this study show that
management has become more disciplined in its approach to major systems
projects such as ERP. The study confirms that the way a project is managed is
an important determinant of project success. Firms implementing ERP are
generally using recommended management practices. These practices work for
some but do not work for others. A new question to be examined is why the
conventional wisdom expressed by academics and practitioners works for some
261
implementation projects, but not for others? Perhaps, rather than examining this
critical success factors individually, we should examine the factors in combination

as mutually supportive management systems (Maciariello & Kirby, 1994). The
interaction of formal and informal management practices may create mutually
reinforcing controls leading to project success.
APPENDIX I
ERP IMPLEMENTATION QUESTIONNAIRE
263
ERP IMPLEMENTATION QUESTIONNAIRE

The purpose of this questionnaire is to gather data on management
practices used by firms in implementing ERP systems. Your response will
be combined with others and summarized for reporting purposes. All
replies will be treated as strictly confidential and no individuals or
organizations will be identified.
Instructions: Please refer to only one implementation project in your
responses to the questions. The implementation project does not need to relate
to your current employer. Circle the best answer, unless instructed otherwise.
Comments on any of the questions may be made in the Comments section at
the end of the questionnaire. If you have not been involved in an ERP
implementation skip to page 10, part 2.
CIRCLE THE BEST ANSWER, unless instructed otherwise.
1. How would you rate the success of the ERP system implementation
experience you are referencing for this questionnaire?
Successful
Partly successful
Barely successful
Unsuccessful
Key: D= Decreased, SD = Slightly Decreased, Sam e=rem ained the same, Sl= slightly increased,
l=lncreased
2. How did the ERP system implementation affect

inventory turnover?
D SD Same SI
3. How did the ERP system implementation affect on-time

deliveries?
4. How did the ERP system implementation affect delivery
lead times?
5. How did the ERP system performance compare with
the previous legacy system in terms of:
a. reliability
D SD Same SI
D SD Same
SI
D SD Same
SI
b. response rates
D SD Same
SI
c. accuracy of data
D SD Same SI
d. ease of use
D SD Same
SI
264
Key: D= Decreased, SD= Slightly Decreased, Sam e=rem ained the same, Sl= slightly increased,
^Increased
6.
How did this implementation affect the overall
D SD Same
quality of the reports produced by the ERP system
compared to the older systems?
7.
How did this implementation affect your use of ERP
D SD Same
systems reports compared with your use of older system
reports?
8.
How did the ERP implementation affect the
D SD Same
accuracy and timeliness of financial reports, compared
with those from the older systems?
9.
How did the implementation affect the satisfaction
D SD Same
of the users of the ERP systems compared with their
satisfaction with older systems?
10.
How did organizational performance, as measured
D SD Same
by operating profit or similar measure, change since
implementing the ERP system?
10a. If other events overshadowed the impact of the ERP system, please
SI
SI
SI
SI
SI
explain: _____________________________________________________
11.
Does management consider the ERP system worth the
investment?
12. Was the project completed on time?
Early
On time
3 mo. late
Yes
No
6 mo. late
1 year late
More than 1
yr. late
10%-25%
over budget
26%-50%
over budget
More than
50% over
budget
13. Was the project competed on budget?

Under
budget
On budget
1%-10%
over budget
265
14. Indicate if any of the goals below describe reasons for adopting your project
and whether the goals were met by the project.
Reason
If yes, how well was goal met?
a. Reducing system
operating costs
Yes
b. Solving Y2K or
similar specific
problems
Yes
c. Solving maintenance
problems with legacy
system
Yes
d. Accommodate
business growth
Yes
e. Improve business
processes or
standardize data
Yes
f. Reduce inventory
carrying costs
Yes
g. Eliminate delays in
filling customer orders
Yes
No
No
No
No
No
No
No
Fully
achieved
Mostly
achieved
Some
improvement
No
change or
worse
Fully
achieved
Mostly
achieved
Some
improvement
No
change or
worse
Fully
achieved
Mostly
achieved
Some
improvement
No
change or
worse
Fully
achieved
Mostly
achieved
Some
improvement
No
change or
worse
Fully
achieved
Mostly
achieved
Some
improvement
No
change or
worse
Fully
achieved
Mostly
achieved
Some
improvement
No
change or
worse
Fully
achieved
Mostly
achieved
Some
improvement
No
change or
worse
PLANNING
15. Which statement below describes best the status of Business Planning and
Information Systems Planning at the organization? Circle the choice that best
describes the firm whose project you are discussing.__________________
a. No planning:
No formal business planning or ERP systems
planning.
b. Stand-alone planning:
Presence of either business plan or ERP
systems plan, but not both.
ERP systems planning function reacts to
c. Reactive planning:
business plan but has no input in the
business planning process.
d. Linked planning:
Business planning is interfaced with ERP
systems planning. Systems resources are
e. Integrated planning:
Business planning is indistinguishable for
266
ERP systems planning. They occur

simultaneously and interactively.
16.
IS and business
executives share a common
vision of the role and
contribution of IT to the
organizations mission.
17.
IS executives
understand current business
objectives.
18. Business executives
understand current IT
objectives.
Strongly
disagree
Disagree
No
opinion
Agree
Strongly
agree
Strongly
disagree
Disagree
No
opinion
Agree
Strongly
agree
Strongly
disagree
Disagree
No
opinion
Agree
Strongly
agree
ORGANIZING
19. Was a project to implement ERP formally established with a
Yes No
project manager?______________________________________________________
20. What was the approximate percentage of the Project Managers time
devoted to the implementation project during each project phase?
Phase
Description
a. Chartering Phase
Define decisions for the business case

and identify constraints
Get system and end users up and running
Stabilize, eliminate bugs, get to normal
operations
Maintain systems, support users, get
results, upgrade, systems extensions
b. Project Phase
c. Shakedown
Phase
d. Onward and
Upward Phase
Percentage
of PM time
21. What degree of authority was given to the Project Manger to complete the
implementation?
Average - Authority only covered personnel assigned to specific
implementation tasks.
Low
Below
average
Average
Above
average
21a. Did the project manager have the authority to accept or reject
implementation team members?
High
Yes
No
267
22. What level of importance was given to the ERP implementation project in
relation to accomplishing other business unit objectives?
Average - Level of importance less than most other business unit objectives.
Low
Below average
Average
High
Above average
23.What was the level of management to which the project manager reported?
Board of Directors
Department
Manager
CEO/General
Manager
Lower-level
Manager
24.Was a matrix organization structure established for the project

manager?
Yes
No
25. What was the approximate percentage of the project groups time allocated
solely to the ERP implementation project?
_____________ ___________
1%-20%
21%-40%
41-60%
61-80%
81 %-100%
26. What degree of project support did the business units senior manager give?
Average - Occasional support given by the business units senior manager.
Low
Below average
Average
Above average
High
STAFFING
27. Approximately how many years of ERP systems experience did the Project
Manager have?_______________ _____________________________________
3-4 years
Over 4 years
None
1-2 years
28. Approximately how many years of project management experience did the
Project Manager have?_______ _____________ _____________ ___________
Over 10 years
1-2 years
3-5 years
6-10 years
None
29. How motivated was the Project Manager to achieve success of the
Average-just motivated enoug h to complete
High
Average
Above average
Low
Below average
30. Were any monetary or non-monetary rewards promised to the

project manager for successful completion of the project?
Yes
268
No
30a. Describe the type of rewards:
31. How much importance was placed on training during the implementation
project?
_________ Average = Occasional user training on an as required basis
Low
Below average
Average
Above average
High
32. During which phase or phases of the project was business process
education provided?__________________________________________
BP education conducted?
Phase
Description of Phase
a. Chartering Phase
b. Project Phase
c. Shakedown
Phase
d. Onward and
Upward Phase
Define decisions for the

business case and identify
constraints
Get system and end users up
and running
Stabilize, eliminate bugs, get
to normal operations
Maintain systems, support
users, get results, upgrade,
systems extensions
Yes
No
Yes
No
Yes
No
Yes
No
33. How long before the actual start up of the ERP systems was software
specific training started:
1-2 weeks
3-4 weeks
5-6 weeks
More than 6 weeks
After system was

up and running
34. What was the quality of training during the system implementation phase?
Average = Quality of training only included the minimum requirements for
implementation.
Low
Below average
35. Was training given too

early during the project
requiring it to be repeated?
36. Was testing used to
verify retention of training
Average
Above average
High
Never
Rarely
Sometimes
Occasionally
Frequently
Never
Rarely
Sometimes
Occasionally
Frequently
269
materials presented?
37. Approximately what percentage of the total project budget was spent on
training?
None
1-5%
6-10%
11-15%
15-20%
38a. Was a consultant used on the project? If no, skip to

auestion 42
38b. Was the consultant the project manager?
38c. Was the consultant an individual or firm?
Over 20%
Yes
No
Yes
Individual
No
Firm
39. What percentage of time was a consultant used during each phase of
system implementation?
Phase
Description
Percentage of
Consultant
total time in
each phase
Chartering Phase
Project Phase
Shakedown Phase
Onward and Upward
Phase
Define decisions for the business case

and identify constraints
Get system and end users up and
running
Stabilize, eliminate bugs, get to normal
operations
Maintain systems, support users, get
results, upgrade, systems extensions
%
%
%
%
40. If a consultant was used, in which areas of the project was the consultant
used?
Areas
a.
b.
c.
d.
e.
Use of consultant
Planning
Vendor selection
Software installation
Change management
Other -Specify
Heavy
Heavy
Heavy
Heavy
Heavy
Moderate
Moderate
Moderate
Moderate
Moderate
Slight
Slight
Slight
Slight
Slight
Not
Not
Not
Not
Not
involved
involved
involved
involved
involved
41. What impact did the use of a consultant have on the success of the project?
Not used
Very
unfavorable
Unfavorable
No Impact
Favorable
Very
favorable
270
LEADING
42. What level of involvement of the General Manager/President did you
perceive?
Average - Occasional review of the implementation progress with
department heads.
Low
Below
average
Average
Above
average
High
43. Did a champion play a significant role in the system implementation?

A champion is someone who vigorously promotes their vision of IT and
overcomes hurdles in the authorization and implementation process.
Very significant
Significant
Not important
No Champion
44. What was the organizational level of the champion?

Senior Management
Middle Management
Lower level Management
45. How effective was the champion in reducing user resistance?

No effect or no
champion
Very ineffective
Slightly
ineffective
Slightly
effective
Very effective
46. What was the level of user resistance during the ERP implementation
project?
Average - Most users referred to the system as your system throughout the
implementation process.
Low
Below average
Average
Above average
High
47. What was the level of management awareness of user resistance during
implementation?
Average- Management aware of less than half of the user resistance problems.
Low
Below average
Average
Above average
High
48. How well did management communicate the need for a new system?
Average - Management only addressed about half the needs for a new system.
Low
Below average
Average
Above average
High
49. How effective was management in reducing user resistance?

Average - Management was able to reduce user resistance by half.
Low
Below average
Average
Above average
High
CONTROLLING
50. How often per month was the project reviewed by the senior business unit
manager?
______________
t___ _______
Weekly
Biweekly
Less than
monthly
Monthly
Not at all
51. Was a steering committee used to review the system

Yes
implementation progress?
52. If a steering committee was used, did the President/CEO/General Yes
manager head it?
53. If a steering committee was not used, was any other control
Yes
mechanism outside of the project team used?
53a. If the answer to 53 is yes, please describe the control mechanism:
54. Were project costs monitored during the course of the project?
55. Did the completed ERP system provide the organization with a
competitive advantage over other firms in its industry?_____________
55a If yes, how?
No
No
No
Yes No
Yes No
DEMOGRAPHIC INFORMATION
56. Did the company have previous experience in the implementation
Yes No
of major systems such as MRP or MRP II?_________________________________
56a. If yes, specify type of system: MRP
MRPII
Other (describe below)
57. What are the primary products manufactured by the company?
58 . What is the approximate sales volume of the company?

Under $500 million
Over$1 billion
Between $500 million
and $1 billion
272
59. What was the approximate completion date of the project?______________
60. Which ERP vendor package was used in the project? If more than one
please indicalte all used.
SAP ORACLE BAAN
Other (please specify)
J. D.
Edwards
61. Were all application packages implemented at one time (big

bang) or were individual applications implemented separately
over a period of time (roll-out.)
Big
bang
Roll
out
62. What function best describes your position in the organization

General
Management
Finance and
Accounting
Operations
Sales and
marketing
Other (specify)
63. Comments on any question(s)?
Part 2.
If you have not been involved in an ERP implementation, which of the reasons
below best describes the organizations decision concerning ERP?
A1. Never considered ERP.
Agree
Disagree
A2. ERP adopted, but not installed.
Agree
Disagree
A3. Considering ERP now, but no decision.
Agree
Disagree
A4. Considered ERP, but did not adopt for the

following reasons-indicate all that apply
a. No perceived benefit
b. Unwilling to make financial commitment
c. Lack technical expertise in organization
d. Lack of expertise in management or
staff
e. No external pressure to adopt-from
vendors, customers, etc.
A5. Comments:
Agree
Agree
Agree
Agree
Disagree
Disagree
Disagree
Disagree
Agree
Disagree
274
APPENDIX II
March 3, 2003
E1PRE. E1FIRST E1LAST
E1TITLE
CONAME
ADDRESS
CITY, STATE ZIP
DearE1PRE. E1LAST:
As an executive with a firm that is a likely user of Enterprise Resource Planning systems
software, I would invite you to participate in a study that will identify critical success
factors leading to successful ERP implementations.
Enterprise Resource Planning systems claim to be off-the-shelf solutions to the
information needs of firm s like yours. Global businesses are spending over $20 billion a
year to implement ERP systems. Yet, the business press is filled with stories of firms
experiencing problems with implementation and some even terminating the
implementation projects.
You and your firm have been selected from the Harris Manufacturing Database to
participate in this survey. Your participation in this confidential study is completely
voluntary. You can withdraw from this study at any time and can refuse to answer any
questions on the questionnaire without any negative consequences. No risks have been
identified with participation in this project.
This research seeks to identify critical success factors related to the implementation of
ERP systems projects. Someone in your functional area familiar with your ERP
implementation project should complete the attached questionnaire. If you are not this
person, please pass this questionnaire with the accompanying cover letter on to the
appropriate person. The questionnaire is investigating how the project was
managed and the results, not the technical aspects of ERP. The results of individual
questionnaires will be held in strict confidence and no information about your company
or about the person completing the questionnaire will be released. All data will be
reported in aggregate form.
The results of this study will benefit firms implementing ERP or similar large systems
projects as well as academics studying such implementation projects
275
If you would like to receive a summary of the research findings please fill out the contact
information on the questionnaire.
This study and its procedures have been approved by The Claremont Graduate
University Institutional Review Board, which may be contacted at 909-607-9406. This
board is responsible for ensuring the protection of research participants.
This doctoral dissertation research is conducted under the supervision of Dr. Paul Gray,
Emeritus Professor of Information Science at Claremont Graduate University. His
contact information follows:
Dr. Paul Gray
Claremont Graduate University
School of Information Science
130 East Ninth Street
Claremont, CA 91711,
909-621-8209
Paul.Grav@ cqu.edu.
The principal researcher is Joseph Bradley, EMBA, CPA, Kuolt Distinguished Executivein-Residence Professor at Central Washington University. His contact information
follows:
Prof. Joseph Bradley
Central Washington University
400 E. 8th Avenue, MS 7484
Ellensburg, WA 98926-7484,
509-963-3520
fax 509-963-2875
BradleJo@cwu.edu
Your participation in this study will help inform both firms implementing ERP projects and
academics studying the process. Please participate in this worthwhile study. I
encourage you to keep a copy of this invitation to participate for your records.
Very truly yours,
Joseph Bradley
Kuolt Distinguished Executive-in-Residence Professor
276
APPENDIX III
Letter to Obtain Consent at Case Study Sites
CWU Letterhead
(This draft serves as a guide only as specific circumstances may vary)

Date
Officer
Case Study site address
Dear (officers name)

Thank you for agreeing to participate in my research. The purpose of this letter
is to provide you with information required by my university and to obtain your
consent to participate in the study.
This research project is part of a doctoral dissertation research project at
Claremont Graduate University. The research seeks to identify critical success
factors in ERP implementation that are based in management theory. The
results will aid management in future implementation projects of ERP systems
and other complex systems.
The case study site was selected by contacting several businesses based on
location or the personal knowledge of key officers, (insert situational information)
Participation as a case study site for this project involves providing the
researcher access to several functional managers for approximately one-hour
interview sessions. Based on these sessions, the researcher will write a case
study for inclusion in his dissertation. Participants will have the opportunity to
review the draft case study for accuracy and completeness. If confidentiality is a
problem, the company identity can be disguised. The company is free to
withdraw from the study at any time, as participation is completely voluntary.
Participants may decline to answer any questions with out any negative
consequence. No risks have been identified relating to participation in this study.
277
The principal researcher is Joseph Bradley, EMBA, CPA, who currently the Kuolt
Distinguished Executive-in-Residence Professor at Central Washington
University. His contact information follows:

509-963-3520
fax 509-963-2875
BradleJo@cwu.edu
University Institutional Review Board. This board is responsible for ensuring the
protection of research participants.
This doctoral dissertation research is conducted under the supervision of Dr.
Paul Gray, Emeritus Professor of Information Science at Claremont
Graduate University. His contact information follows:
Dr. Paul Gray
909-621-8209
Paul.Grav@cqu.edu.
Please keep a copy of this consent/information document for your files.
Your participation in this study will help inform both firms implementing ERP
projects and academics studying the process. Please participate in this
worthwhile study.
Very truly yours,
Joseph Bradley
278
APPENDIX IV
March 14, 2003

Ms. Janet Hall
M-l Drilling
5950 North Course Drive
Houston, TX 77072
Dear Janet,
Thank you for agreeing to participate in my research. The purpose of this letter
is to provide you with information required by my university and to obtain your
consent to participate in the study.
This research project is part of a doctoral dissertation research project at
Claremont Graduate University. The research seeks to identify critical success
factors in ERP implementation that are based in management theory. The
results will aid management in future implementation projects of ERP systems
and other complex systems.
Smith Industries, Inc. and Ml Drilling were selected because the firms fit the
profile for my research, manufacturing companies with revenues over $500
million, and my personal contact with a key officer, Loren Carroll.
Participation as a case study site for this project involves providing the
researcher access to several functional managers for approximately one-hour
interview sessions. Based on these sessions, the researcher will write a case
study for inclusion in his dissertation. Participants will have the opportunity to
review the draft case study for accuracy and completeness. If confidentiality is a
problem, the company identity can be disguised. The company is free to
withdraw from the study at any time, as participation is completely voluntary.
Participants may decline to answer any questions with out any negative
consequence. No risks have been identified relating to participation in this study.
279
The principal researcher is Joseph Bradley, EMBA, CPA, who currently the Kuolt
Distinguished Executive-in-Residence Professor at Central Washington
509-963-3520
fax 509-963-2875
BradleJo@cwu.edu
University Institutional Review Board. This board is responsible for ensuring the
protection of research participants.
This doctoral dissertation research is conducted under the supervision of Dr.
Paul Gray, Emeritus Professor of Information Science at Claremont Graduate
Dr. Paul Gray
909-621-8209
Paul.Grav@cqu.edu.
Please keep a copy of this consent/information document for your files.
Your participation in this study will help inform both firms implementing ERP
projects and academics studying the process. Please participate in this
worthwhile study.
Very truly yours,
Joseph Bradley
280
APPENDIX V
Exhibit
Questions for Case Study Interviews
This list of questions is a guide only for face-to-face or telephone interviews of
participants in the case studies.
FIRMS BACKGROUND
1. What industry is the firm active?
2. What are the firms main business functions/businesses?
3. How many employees does the firm have?
4. What is the sales/revenue of the firm?
5. Does the company build to order or for inventory?
6. What is your area of responsibility?
7. How many employees in your area?
ERP PROJECT
8. Describe the state of the firms MIS before the ERP implementation, i.e.,
legacy systems.
9. When did the firm begin implementation of ERP?
10. Which modules of the ERP software were implemented?
11.Was the system implemented by a big bang approach, or incremental

approach?
12. When was the project completed?
13. What were your biggest concerns about the project?
14. How were those concerns addressed?
15. How did management plan to measure success before the project actually
started? After completion?
16. Was the project successful?
282
17. How did the ERP project affect inventory turnover?
18. How did the ERP project affect on-time deliveries?
19. How did the ERP project affect delivery lead times?
20. How did the ERP project affect systems performance in terms of reliability?
Response rates? Accuracy of data? Ease of use?
21. How did the overall quality of reports from the ERP system compare with
those prepared by the older system?
22. How did the accuracy and timeliness of the ERP system produced reports
compare with those from the older system?
23. Compare user satisfaction of the ERP system with the older system.
24. How did organizational performance change since implementing ERP?
25. Was the ERP system a major factor in this change?
26. What other factors influenced the change in performance?
283
27. Does management consider the ERP implementation worth the investment?
28. Was the project completed on time? Explain.
29. Was the project completed on budget? Explain.
30. Describe the companys goals when it embarked on the implementation

project?
31 .Were these goals satisfied by the project?
PLANNING
32. Describe the relationship between business planning and information systems
in your organization.
33. Do business executives and IS executives share the same vision of the role
of IT in the firms mission?
34. Do IS executives understand current business objectives?
35. Do business executives understand current IT objectives?
36. How was the software selected?
ORGANIZING
37. Was a project to implement ERP formally established with a project
manager?
38. How much of the project managers time was devoted to the ERP
39. Did the project manager (PM) have adequate authority to complete the
project?
40. What was the level of importance was given to the ERP implementation
project compared with other business goals?
41. What was the management level to which the PM reported?
42. Was a matrix structure used for the project?
STAFFING
43. How much time did project team members devote to the project?
285
44. How much support was given to the project by senior management?
45. Discuss the experience of the project manager. ERP experience? Project
management experience? Knowledge of your business?
46. How was the PM motivated to achieve success for the project?
47. Discuss how training was conducted for the project.
48. Was both business process and software training provided?
49. Was the timing of the training appropriate?
50. Was testing used to reinforce training?
51. Was a consultant used on the project?
52. Describe the role of the consultant.
53. Did the consultant make a significant contribution to the project?
LEADING
54. Describe the involvement of the General Manager/President.
55. Did a champion play a significant role in the project? Describe the champion
and how he/she contributed to the project.
56. Describe the level of user resistance to the ERP project
57. Was management aware of the resistance?
58. How did management deal with user resistance?
59. How well did management convey the need for the system?
Controlling
60. How often did top management review the project?
61. Was a steering committee used?
62. How did it function?
63. How were project costs monitored during the project?
287
64. Did the project lead to competitive advantage over other firms in you
industry? Or enable you to keep up with competition?
65. Did the firm have previous experience with a major IT project? How did this
experience affect the current project?
66. Were all modules of the project implemented at once (big bang) or were
individual modules implemented separately over time?
67. What vendor package was used?
68. What is your function in the company?
288
APPENDIX VI
MRP IMPLEMENTATION QUESTIONNAIRE
T h e questionnaire is being used to study both successful and unsuccessful

im plem entations.
A s a result of a random selection process you have been selected to answ er the
questionnaire based upon a S U C C E S S F U L im plem entation experience. If you had
the m isfortune to only be associated with an unsuccessful or m arginally successful
im plem entation please answ er the questionnaire based on that experience.
If you feel you can't answ er a particular question feel free to om it it.
A n sw er C od e
(D) Decreased
(S) Same
(SD) Slightly Increased
(I) Increased
(SI) Slightly Increased
BACKGROUND
Successful
1.
For the system im plem entation you are describing, how would you
Unsuccessful
rate the overall experience?

2.
How would you rate the outcom e of th e system im plem entation
SD
SI
SD
SI
SD
SI
SD
SI
SD
SI
on inventory turn-over?
3.
H ow would you rate the outcom e of the system im plem entation

concerning on-tim e deliveries?
4.
H ow would you rate the outcom e of the system im plem entation

concerning delivery lead tim es?
5.
H ow would you rate the outcom e of th e system im plem entation

concerning m aterial shortages?
6.
How would you rate the outcom e of th e system im plem entation

concerning the n u m b e r of m aterial expeditors?
289
Answer Code
(L) Low
7.
(BA) Below Average
(A) Average
(AA) Above Average
H ow does m a n a g e m en t rate u ser satisfaction relative to how well
(H) High
L
BA
AA
BA
AA
the system helps support the user's job functions?

A verag e - Users not quite satisfied with th e w ay the system supports
the job functions.
8.
How does m a n a g e m en t rate u ser satisfaction concerning the

effectiveness of user interaction with the system ?
A verag e - Users not quite satisfied with the e a s e of interaction with
the system .
9.
W a s better information available to users after the im plem entation?
Yes
No
10.
Does m a n a g e m e n t consider that the M R P system has a positive
Yes
No
return on investm ent?
PLANNING
11.
W h a t was the level of user participation in th e initial planning phase?
BA
A AA
BA
A AA
BA
A verag e - O n e user representative from m ost departm ents.

12.
How m uch planning was com pleted prior to beginning the system
im plem entation?
A verag e - Planning consisted of a very basic m ilestone chart.
1 3.
How detailed was the system im plem entation plan?
AA
A verag e - M ilestones only included m ajor m o dule im plem entations.

1 4.
W a s a standardized im plem entation plan used as a guide?
Yes
No
290
Answer Code
(L) Low
(BA) Below Average
(A) Average
(AA) Above Average
15.
W a s a bud get developed for the system im plem entation?
16.
W h a t was the level of detail in th e im plem entation budget?
(H) High
Y es
No
BA
AA H
BA
AA H
BA
AA H
A verag e - B u dg et only included m inim um basic im plem entation

requirem ents.
17.
How m uch im portance was placed on training during th e planning

phase?
Averag e - O ccasional user training on an as required basis.
18.
W h a t w as the quality of training during the system im plem entation?

Averag e - Q uality of training only included the m inim um requirem ents
for im plem entation.
19.
W a s testing used to verify retention of training m aterial presented?
Yes
No
Yes
No
ORGANIZING
20.
W a s a project with a Project M an a g e r from ally established?
20a.
If no, how was the project run?
21.
W h a t w as the approxim ate percentage of the Project M an a g e rs tim e

that w as dedicated to the im plem entation project?
291
Answer Code
(L) Low
22.
(BA) Below Average
(A) Average
(AA) Above Average
W h a t w as the d eg ree of authority given to the Project M an ager
(H) High
L
BA
AA
BA
AA
to com plete the im plem entation?

A v erag e - Authority only covered personnel assigned to specific
im plem entation tasks.
23.
W h a t w as the level of im portance given to the project in relation to

accom plishing other business unit objectives?
A verag e - Level of im portance less than m ost other business unit
objectives.
24.
W h a t was the level of m a n a g e m en t to which the project m an ager
1. G e n . Mgr.
reported?
2. Dept. Hd.
3. Lower
25.
W a s a m atrix organization structure established for the project
Yes
No
m an ager?
26.
W h a t was the approxim ate percentage of the project group's tim e

allocated solely to the system im plem entation?
27.
W h a t was the d eg ree of project support given by the business unit's
BA
AA
senior m anager?
Averag e - O ccasional support given by the business unit's senior
m anager.
STAFFING
28.
A pproxim ately how m an y years of M R P system experience did the
Yrs.
Project M a n a g e r have?
29.
A pproxim ately how m an y years of project m a n a g e m en t experience

did the Project M an a g e r have?
Yrs.
292
Answer Code
(L) Low
30.
(BA) Below Average
(A) Average
(AA) Above Average
How m uch was the Project M an a g e r m otivated to achieve a
(H) High
L
BA
AA H
successful im plem entation?

W h a t percentage of tim e w as a consultant used during system
31 .
im plem entation?
32 .
If a consultant was used, w as h e/s h e the Project M an a g e r?
33.
Yes
If a consultant was used, w as h e/sh e used for training, program
No
a ) Training
direction, or both?
b ) Direction
c) Both
34.
W e re you the Project M an ager?
Yes
No
LEADING
35.
W h a t was the perceived level of involvem ent of the G en eral M an a g e r/
BA
AA H
President?
Averag e - O ccasional review of the im plem entation progress with
d ep artm en t heads.
36.
W h a t are som e of the ways in which the senior m a n a g e r was involved in the
im plem entation?
37.
W h a t w as the level of user resistance during th e M R P
BA
AA
BA
AA
im plem entation?
A verag e - M ost users referred to the system as "your system"
throughout the im plem entation process.
38.
W h a t was the level of m a n a g e m en ts aw areness of user resistance

during the M R P
A verag e - M an a g e m e n t aw are of less than half of th e u ser resistance
problem s.
293
Answer Code
(L) Low
39.
(BA) Below Average
(A) Average
(AA) Above Average
H ow well did m a n a g e m e n t present the need f o r a n ew material
(H) High
L
BA
AA
BA
AA
system ?
A verag e - M a n a g e m e n t only addressed abo ut half th e needs for a new
material system .
40.
How effective w as m a n a g e m e n t in reducing u ser resistance?

A verage - M a n a g e m e n t w as only effective in reducing user resistance
in about half of the user resistance problem s.
CONTROLLING
41.
W a s a formal project m a n a g e m e n t tracking system used for control
Yes
No
purposes?
42.
How often per m onth w as the project reviewed by the senior business
1 2
unit m anager?
43.
W a s a steering com m ittee used to review the system im plem entation
Yes
No
Yes
No
Yes
No
progress?
44.
If a steering com m ittee w as used, was it headed by the P re s ./G e n .

M gr.?
45.
W e re project costs monitored during system im plem entation?
46.
W h a t w as the average inventory accuracy during system
BA
AA H
BA
AA
im plem entation?
A verag e - 8 0 - 9 0 % accuracy.
47.
W h a t w as the average bill of material accuracy during system

im plem entation?
A verag e - 9 0 % accuracy.
294
Answer Code
(L) Low
48.
(BA) Below Average
(A) Average
(AA) Above Average
W h a t was the m aster schedule accuracy during system
(H) High
BA
AA H
BA
AA H
im plem entation?
Averag e - 7 5 % accuracy.
49.
W h a t w as the vendor lead tim e accuracy during system

im plem entation?
A v erag e - 7 5 % accuracy.
P lease give a brief description of the business and M R P system you referenced while
answ ering the above questions. Also, any com m en ts you m ay w ant to express abo ut the
im plem entation.
APPENDIX VII
FREQUENCY ANALYSIS OF INDEPENDENT VARIABLES

V15 Integration of Business and IT Planning
Value Label
Value
No Planning
Stand-alone Planning
Reactive Planning
Linked Planning
1
2
3
4
Frequency
2
2
Percent
12.5%
12.5%
31.3%
37.5%
5
6
Integrated Planning
1
5
Total
16
Mean
3.13
Std Dev
V16 IS and business executives share common vision of IT role
Value Label
Value
Frequency
6.3%
100%
1.147
Percent
Strongly disagree
1
Disagree
2
3
No opinion
3
1
Agree
4
12
Strongly agree
1
5
Total
17
Mean
3.65
Std Dev
V17 IS executives understand current business objectives
Value Label
Value
Frequency
17.6%
5.9%
70.6
5.9%
100%
.862
Percent
Strongly disagree
1
Disagree
2
2
No opinion
3
1
4
Agree
9
Strongly agree
5
5
17
Total
Mean
4.00
Std Dev
V18 Business executives understand curren IT objectives
Value Label
Value
Frequency
Strongly disagree
Disagree
No opinion
Agree
2
3
4
Strongly a g re e
Total
Mean
11.8%
5.9%
52.9%
29.4%
100%
.935
Percent
3.47
4
1
12
23.5%
5.9%
70.6%
17
Std Dev
100%
.874
296
V19 Was a project formally established with a project manager
Value Label
Value
Frequency
Percent
Yes
1
15
No
2
2
Total
17
Mean
Std Dev
1.12
V20a Percentage of project manager time - Chartering Phase
Value Label
Value
Frequency
88.2%
11.8%
100%
.332
Percent
20%
30%
40%
50%
75%
80%
100%
20.0%
13.3%
13.3%
13.3%
6.7%
13.3%
20.0%
100%
.3064
3
2
2
2
1
2
3
Total
15
Mean
.557
Std Dev
V20b Percentage of project manager time - Project Phase
Value Label
Value
Frequency
Percent
30%
40%
45%
75%
80%
95%
100%
1
1
1
3
2
1
6
Total
15
Mean
.797
Std Dev
V20c Percentage of project manager time - Shakedown Phase
Value Label
Value
Frequency
10%
20%
30%
50%
75%
80%
90%
100%
Total
Mean
.660
6.7%
6.7%
6.7%
20%
13.3%
6.7%
40.0%
100%
.239
Percent
1
2
1
2
1
2
1
5
15
Std Dev
6.7%
13.3%
6.7%
13.3%
6.7%
13.3%
6.7%
33.3%
100%
.335
297
V20d Percentage of project manager time - Shakedown Phase
Value Label
Value
Frequency
Percent
0%
10%
15%
20%
25%
30%
40%
75%
80%
100%
1
1
1
4
2
1
1
1
1
2
15
Std Dev
6.7%
6.7%
6.7%
26.7%
13.3%
6.7%
6.7%
6.7%
6.7%
13.3%
100%
.336
Frequency
Percent
Total
Mean
.380
V21 Authority of projec manager
Value Label
Value
Low
1
Below Average
2
Average
4
3
Above Average
4
10
High
5
2
Total
16
Mean
3.88
Std Dev
V21a Project Manager could accept/reject team members
Value Label
Value
Frequency
Percent
13
4
17
Std Dev
76.5%
23.5%
100%
.437
Value
Frequency
Percent
1
2
3
4
5
0
1
1
11
3
16
Std Dev
6.3%
6.3%
68.8%
18.8%
100%
.730
1
Yes
2
No
Total
Mean
1.24
V22 Level of importance given to ERP project
Value Label
Low
Below Average
Average
Above Average
High
Total
Mean
25.0%
62.5%
12.5%
100%
.619
4.00
298
V23 Reporting level of project manager
Value Label
Value
1
Board of Directors
2
CEO/General Mgr.
Dept. Manager
3
Lower-level Mgr.
4
Total
Mean
2.47
V24 Was a matrix organization used?
Value Label
Value
Frequency
Percent
1
7
9
5.9%
41.2%
52.9%
17
Std Dev
100%
.624
Frequency
7
Percent
1
Yes
2
No
9
Total
17
Mean
1.56
Std Dev
V25 Project groups percentage of time on project
1
1%-20%
1
21%-40%
2
5
4
41%-60%
3
61%-80%
4
3
4
81%-100%
5
17
Total
3.24
Mean
Std Dev
V26 Degree of project support from senior management
Value Label
Value
None
1-2 years
3-4 years
Over 4 years
Total
Mean
5.9%
29.4%
23.5%
17.6%
23.5%
100%
1.3
Frequency
Percent
2
6
9
11.8%
35.3%
52.9%
17
Std Dev
100%
.712
Value
Frequency
Percent
0
1
2
3
5
4
2
5
16
Std Dev
31.3%
25.0%
12.5%
31.3%
100%
1.263
Low
1
2
Below Average
Average
3
Above Average
4
High
5
Total
3.41
Mean
V27 Project managers years of ERP experience
Value Label
43.8%
56.3%
100%
.512
1.44
299
V28 Project managers years of project management experience
Value Label
Value
0
None
1
1-2 years
2
3-5 years
6-10 years
3
4
Over 10 years
Total
2.35
Mean
V29 How motivated was the project manager?
Value Label
Value
Frequency
2
Percent
2
4
6
3
17
Std Dev
11.8%
11.8%
23.5%
35.3%
17.6%
100%
1.272
Frequency
Percent
1
Low
2
Below Average
1
Average
3
6.3%
4
7
43.8%
Above Average
High
5
50.0%
8
100%
Total
16
4.44
.629
Mean
Std Dev
V30 Were monetary or non-monetary reward promised to the project mgr.?
1
3
20.0%
Yes
2
80.0%
No
12
15
100%
Total
.414
Mean
1.80
Std Dev
V31 Importance placed on training
Value Label
Value
Frequency
1
Low
1
2
Below Average
3
1
Average
Above Average
4
11
High
5
4
Total
17
Mean
4.00
Std Dev
V32a Was business process education provided in chartering phase?
Value Label
Value
Frequency
1
Yes
9
2
7
No
Total
16
1.44
Mean
Std Dev
V32b Was business process education provided in project phase?
Value Label
Yes
No
Total
Mean
Percent
5.9%
5.9%
64.7%
23.5%
100%
.935
Percent
56.3%
43.8%
100%
.512
Value
Frequency
Percent
1
2
13
2
15
Std Dev
87.6%
13.3%
100%
.352
1.13
300
V32c W as business process education provided in shakedown phase?
Value Label
Value
Frequency
7
Percent
Frequency
Percent
6
7
13
Std Dev
46.2%
53.8%
100%
.519
Frequency
Percent
5
5
6
1
17
Std Dev
29.4%
29.4%
35.3%
5.9%
100%
.951
Frequency
Percent
1
53.8%
Yes
2
6
46.2%
No
13
100%
Total
1.46
.519
Mean
Std Dev
V32d Was business process education provided in onward and upward phase?
Value Label
Value
1
Yes
No
2
Total
1.54
Mean
V33 Time before start up the software training started
Value Label
Value
1
1-2 weeks
2
3-4 weeks
5-6 weeks
3
4
More than 6 weeks
5
After start up
Total
3.18
Mean
V34 Quality of training during project phase
Value Label
Value
1
2
3
4
5
Low
1
Below Average
Average
10
Above Average
5
High
1
17
Total
Mean
3.29
Std Dev
V35 Was training given too early, reguiring it to be repeated?
Value Label
Never
Rarely
Sometimes
Occasionally
Frequently
Total
Mean
5.9%
58.8%
29.4%
5.9%
100%
.849
Value
Frequency
Percent
1
2
3
4
5
1
4
10
1
1
17
Std Dev
5.9%
23.5%
58.8%
5.9%
5.9%
100%
.883
2.82
301
V36 Was testing used?
Value Label
Value
1
Never
2
Rarely
3
Sometimes
4
Occasionally
5
Frequently
Total
2.41
Mean
V37 Percentage of pro ect budget spent on training
Value Label
Value
0
None
1
1-5%
2
6-10%
11-15%
3
4
15-20%
Over 20%
5
Total
1.195
Mean
V38a Was a consultanl used on the project?
Value Label
Value
1
Yes
2
No
Total
Mean
1.12
V38b Was the consultant the project manager?
Value Label
Value
1
Yes
2
No
Total
1.64
Mean
V38c Was the consultant an individual or firm?
Value Label
Individual
Firm
Both
Total
Mean
Value
1
2
3
1.93
Frequency
Percent
5
6
3
29.4%%
35.3%
17.6%
3
17
Std Dev
17.6%
100%
1.417
Frequency
Percent
1
3
5
4
3
6.3%
18.8%
31.3%
25.0%
18.8%
16
Std Dev
100%
1.195
Frequency
Percent
15
2
17
Std Dev
88.2%
11.8%
100%
.332
Frequency
Percent
5
9
14
Std Dev
35.7%
64.3%
100%
.497
Frequency
2
Percent
12
1
15
Std Dev
13.3%
80.0%
6.7%
100%
.458
302
V39a Percentage of consultants time used during chartering phase
Value Label
Value
.0
.2
.25
.3
.4
.5
.75
.8
1.0
Frequency
2
1
2
1
1
1
1
1
3
Total
13
.496
Mean
Std Dev
V39b Percentage of consultants time used during project phase
Value Label
Value
Frequency
.00
.15
.20
.25
.30
.40
.45
.80
1.00
1
1
1
1
1
1
1
1
5
13
Total
.581
Mean
Std Dev
V39c Percentage of consultants time used during shakedown phase
Value Label
Value
.0
.1
.2
.3
.5
.8
1.0
Total
Mean
.388
Frequency
2
3
1
1
3
1
2
13
Std Dev
Percent
15.4%
7.7%
15.4%
7.7%
7.7%
7.7%
7.7%
7.7%
23.1%
100%
.373
Percent
7.7%
7.7%
7.7%
7.7%
7.7%
7.7%
7.7%
7.7%
38.5%
100%
.391
Percent
15.4%
23.1%
7.7%
7.7%
23.1%
7.7%
15.4%
100%
.362
303
V39d Percentage of consultants time used during onward/upward phase
Value Label
Value
Frequency
Percent
.0
.1
.2
.3
.5
.8
1.0
3
5
1
1
1
1
1
13
Std Dev
100%
.320
Frequency
Percent
4
4
3
3
14
Std Dev
28.6%
28.6%
21.4%
21.4%
100%
1.151
Frequency
Percent
1
2
6
6
15
Std Dev
13.3%
6.7%
40.0%
40.0%
100%
.915
Frequency
5
4
Percent
Total
.250
Mean
V40a Consultant use in planning
Value Label
Value
Heavy
3
2
Moderate
1
Slight
0
Not Involved
Total
1.64
Mean
V40b Consultant use in vendor selection
Value Label
Value
Heavy
3
2
Moderate
1
Slight
Not Involved
0
Total
.87
Mean
V40c Consultant use in software installation
Value Label
Value
Heavy
3
2
Moderate
1
Slight
0
Not Involved
Total
Mean
1.80
V40d Consultant use in change management
Value Label
Value
Heavy
3
2
Moderate
1
Slight
0
Not Involved
Total
1.36
Mean
V40e Consultant use in other-specify
Value Label
Value
4
2
15
Std Dev
33.3%
26.7%
26.7%
13.3%
100%
1.082
Frequency
Percent
9
1
4
14
Std Dev
64.3%
7.1%
28.6%
100%
.929
Frequency
Percent
304
Heavy
3
2
Moderate
1
Slight
Not Involved
0
Total
Mean
1.33
V41 Impact of consultant on project
Value Label
Value
Not used
0
Very unfavorable
1
2
Unfavorable
No impact
3
Favorable
4
Very favorable
5
Total
Mean
3.80
V42 Level of general manager involvement
Value Label
Value
High
5
4
Above average
Average
3
Below average
2
Low
1
Total
Mean
3.0
V43 Did a champion play a significant role?
Value Label
Value
Very significant
3
2
Significant
Not important
1
No champion
0
Total
Mean
1.88
V44 Organizational level of champion
Value Label
Senior mgmt.
Middle mgmt.
Lower level mgmt.
Total
Mean
1
2
1
2
6
Std Dev
16.7%
33.3%
16.7%
33.3%
100%
1.211
Frequency
Percent
13.3%
12
1
15
Std Dev
80.0%
6.7%
100%
.775
Frequency
Percent
4
9
2
1
16
Std Dev
25.0%
56.3%
11.8%
5.9%
100%
.816
Frequency
5
Percent
9
5
29.4%
52.9%
17.6%
17
Std Dev
100%
.697
Value
Frequency
Percent
1
2
3
10
6
62.5%
37.5%
16
Std Dev
100%
.500
1.38
305
V45 How effective was champion in reducing user resistance?
Value Label
Value
0
No effect
1
Very ineffective
2
Slightly ineffective
Slightly effective
3
4
Very effective
Total
Mean
3.13
V46 Level of user resis tance during project
Value Label
Value
Frequency
Percent
1
1
6.3%
6.3%
8
5
16
Std Dev
50.0%
31.3%
100%
1.204
Frequency
Percent
1
1
Low
2
Below average
5
Average
3
4
Above average
4
5
High
5
1
Total
16
Mean
3.0
Std Dev
V47 Level of management awareness of user resistance
Value Label
Value
Low
1
2
Below average
3
Average
4
Above average
High
5
Total
3.47
Mean
V48 Management communication of need for ERP
Value Label
Value
Frequency
Percent
5.9%
8
6
2
17
Std Dev
47.1%
31.3%
6.3%
100%
.943
Frequency
Percent
Low
1
1
2
2
Below average
Average
3
5
4
7
Above averaqe
High
5
2
Total
17
3.41
Mean
Std Dev
V49 Management effectiveness in reducing user resistance
Value Label
Low
Below average
Average
Above average
High
Total
Mean
6.3%
31.3%
25.0%
31.3%
6.3%
100%
1.095
5.9%
11.8%
29.4%
41.2%
11.8%
100%
1.064
Value
Frequency
Percent
1
2
3
4
5
1
1
9
5
1
17
Std Dev
5.9%
5.9%
52.9%
29.4%
5.9%
100%
.903
3.24
306
V50 Frequency of senior management review
Value Label
Value
1
Weekly
2
Bi-weekly
3
Monthly
4
Less than monthly
5
Not at all
Total
Mean
V51 Was steering committee used?
Value Label
Value
1
Yes
2
No
Total
Mean
1.35
V52 Was CEO head of steering committee?
Value Label
Value
1
Yes
2
No
Total
Mean
1.69
V53 Other control mec nanism outside project team
Value Label
Value
1
Yes
2
No
Total
Mean
1.83
V54 Were project cost monitored?
Value Label
Value
1
Yes
2
No
Total
1.13
Mean
V55 Did ERP provide competitive advantage?
Value Label
Yes
No
Total
Mean
Value
1
2
1.69
Frequency
Percent
2
2
9
3
1
17
Std Dev
11.8%
11.8%
52.9%
17.6%
5.9%
100%
1.115
Frequency
Percent
11
6
17
Std Dev
64.7%
35.3%
100%
.493
Frequency
Percent
4
9
Std Dev
30.8%
69.2%
100%
.480
Frequency
Percent
1
5
6
Std Dev
16.7%
83.3%
100%
.408
Frequency
Percent
14
2
16
Std Dev
87.5%
12.5%
100%
.342
Frequency
4
Percent
9
13
Std Dev
30.8%
69.2%
100%
.480
307
V56 Previous experience with major systems?
Value Label
Yes
No
Total
Mean
V58 Company sales volume
Value Label
Under $500 million
$500mm-1 billion
Over$1 billion
Total
Mean
V59 Project completion date
Value Label
Value
Value Label
Percent
1.86
12
14
Std Dev
30.8
69.2
100%
.363
Value
Frequency
Percent
1
2
3
1.63
10
2
4
16
Std Dev
62.5%
12.5%
25.0%
100%
.885
Value
Frequency
Percent
1994
1995
1999
2001
2002
2003/4
1
1
3
3
2
3
13
Value
Frequency
2
1
2
Total
Mean
V60 Software package used
SAP
Oracle
Baan
J.D. Edwards
OtherRoss Systems
Expandable
Syspro
Soloman(Microsoft)
BPCS
MAPICS
IFS
Western Data
CMS
PeopleSoft
Total
Frequency
2
1
2
3
4
5
Percent
11.7%
5.9%
17.6%
1
1
1
1
1
1
1
1
1
2
17
5.9%
5.9%
5.9%
5.9%
5.9%
5.9%
5.9%
5.9%
5.9%
11.7%
100%
308
V61 Implementation method
Value Label
Value
1
Big bang
2
Roll out
Total
1.63
Mean
V62 Respondents functional area
1
General Mgmt.
2
Finance & Acctg
Operations
3
4
Sales/Marketing
5
Other-IT/IS/CIO
Total
Frequency
Percent
6
10
16
Std Dev
37.5%
62.5&
100%
.500
4
.6
2
23.5%
35.3%
11.8%
5
17
29.4%
100%
309
APPENDIX III
GLOSSARY
Source: APICS DICTIONARY-9th Edition
Bill of materials (BOM) - 1) A listing of all the subassemblies,
intermediates, parts, and raw materials that go into a parent assembly showing
the quantity of each required to make an assembly. It is used in conjunction with
the master production schedule to determine the items for which purchase
requisitions and production orders must be released. A variety of display formats
exist for bills of material, including the single-level bill of material, indented bills of
materials, modular (planning) bill of material, transient bill of material, matrix bill
of material, and costed bill of material. 2) A list of all the materials needed to
make one production run of a product, by a contract manufacturer, of piece
parts/components for it customers. The bill of material may also be called the
formula, recipe, or ingredients list in certain process industries.
Capacity requirements planning (CRP) - The function of establishing,
measuring, and adjusting the limits or levels of capability. The term capacity
requirements planning in this context refers to the process of determining in
detail the amount of labor and machine resources required to accomplish the
tasks o f production. O pen sh o p ord e rs and planned orders in the M R P system
are input to CRP, which through the use of parts routings and time standards
translates these orders into hours of work by work center by time period. Even
310
though rough-cut capacity planning may indicate that sufficient capacity exists to
execute the MPS, CRP may show that capacity is insufficient during specific time
periods.
Master production schedule (MPS) - 1) The anticipated build schedule for
those items assigned to the master scheduler. The master schedule maintains
this schedule, and in turn, it becomes a set of planning numbers that drives
material requirements planning. It represents what the company plans to
produce expressed in specific configurations, quantities, and dates. The master
production schedule is not a forecast that represents a statement of demand.
The master production schedule must take into account the forecast, the
production plan, and other important considerations such as backlog, availability
of material, availability of capacity, and management policies and goals. Syn:
master schedule. 2) The result of the master scheduling process. The master
schedule is a presentation of demand, forecast, backlog, the MPS, the projected
on-hand inventory, and the available-to-promise quantity.
Production plan - The agreed-upon plan that comes from the aggregate
(production) planning function, specifically the overall level of manufacturing
output planned to be produced, usually stated as a monthly rate for each product
family (a group of products, items, options, features, etc.). Various units of
measure can be used to express the plan: units, tonnage, standard hours,
number of workers, etc. The production plan is managements authorization for
the master scheduler to convert it into a more detailed plan, that is, the master
production schedule.
312
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Enterprise Resource Planning Success A Management Theory Approach To Critical Success Factors

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ENTERPRISE RESOURCE PLANNING SUCCESS:

A MANAGEMENT THEORY APPROACH TO CRITICAL

UMI Number: 3139266

All rights reserved.

ProQuest Information and Learning Company

Copyright by Joseph Bradley 2004

'aul Gray, CommittepChair

bph Mafciarello, Committee Member

Conrad Shayo, Committee Member

Abstract Of The Dissertation

ENTERPRISE RESOURCE PLANNING SUCCESS:

This study examines the critical success factors for implementing

functional managers to reflect wider organizational impact of the expanded

- Is prior organizational experience with a major systems implementation

Does an ERP system lead to competitive advantage, or is it a competitive

quality of training and the effectiveness of a project champion lead to successful

Richard Ellsworth got me hooked on the Drucker EMBA program

Vijay Sathe ignited my desire to continue studying management

Peter Ring Smith (Visiting Professor from Loyola Marymount

DESCRIPTION OF ERP SYSTEMS

WHY DO FIRMS ADOPT ERP SYSTEMS?

WHY DO FIRMS NOT ADOPT ERP SYSTEMS?

RISKS ASSOCIATED WITH ERP IMPLEMENTATION

CRITICAL SUCCESS FACTORS

CRITICAL SUCCESS FACTORS FOUND

CHANGES SINCE SNELLERS STUDY

CHAPTER II - LITERATURE REVIEW

MRP, MRPII AND ERPAN EVOLUTION

OPERATIONAL PLANNING MODEL

CHAPTER III - RESEARCH QUESTION FRAMEWORK, AND

CHAPTER IV - CASE STUDIES

CASE 1 - PACIFIC CLAY PRODUCTS INC

CASE 2 & 3 SMITH INTERNATIONAL, INC.

CASE 2 - SMITH BITS/SMITH SERVICES

CASE 3 - M-l, LLC

CASE 4 - PACIFIC AEROSPACE

CASE 5 - LITTON INDUSTRIES

CASE 7 - PACCAR / KENMEX

CASE 8 - NORTHROP GRUMMAN

SUMMARY OF CASE STUDIES

CHAPTER V ANALYSIS METHODS AND RESULTS

SUCCESSFUL VS. UNSUCCESSFUL

CHAPTER VI. CONCLUSIONS

APPENDIX 1. ERP IMPLEMENTATION QUESTIONNAIRE

APPENDIX II. QUESTIONNAIRE TRANSMITTAL LETTER

APPENDIX III. CASE STUDY FIRM CONSENT LETTER

APPENDIX IV. CASE STUDY INDIVIDUAL CONSENT LETTER

APPENDIX V. CASE STUDY INTERVIEW QUESTIONS

APPENDIX VI. MRP IMPLEMENTATION QUESTIONNAIRE

APPENDIX VII FREQUENCY ANALYSIS OF INDEPENDENT

APPENDIX VIII GLOSSARY

Some Functions Available in SAP R/3

Evolution of ERP Systems

Summary of Case Study Site Characteristics

Questionnaire Mailing Summary

Multiple Regression Results of Variables V27 to V30

Company Specific Goals for ERP Implementation

Levels of Business Planning and IT Planning

Evolution of ERP System

In the mid-1990s, businesses around the world were spending

In addition, ERP can be viewed as the first

wave of enterprise systems applications including customer relationship

DESCRIPTION OF ENTERPRISE RESOURCE PLANNING SYSTEMS.