Journal of Modelling in Management

Identifying success factors for implementation of ERP at Indian SMEs: A comparative

study with Indian large organizations and the global trend
Shashank Saini Siddhartha Nigam Subhas C. Misra

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Identifying success factors for

implementation of ERP
at Indian SMEs
A comparative study with Indian large
organizations and the global trend

Identifying
success factors

103

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Shashank Saini, Siddhartha Nigam and Subhas C. Misra

Indian Institute of Technology, Kanpur, India
Abstract
Purpose The purpose of this paper is to identify the success factors for implementation of
enterprise resource planning (ERP) at Indian small to medium-sized enterprises (SMEs) and to provide
a comparative study with the trend in Indian large organizations and the global trend.
Design/methodology/approach In this paper, the authors propose a hypothetical success factors
model to address the research questions and validated the hypotheses using large-scale survey-based
methodology. In this research the authors evaluated the success factors for implementation of ERP in
Indian SMEs and then compared them with large Indian organizations and the global trends. In this
paper, the authors have also tried to give some intuitive explanation to the possible reasons of
difference between factors for SMEs compared to large organizations and global trends.
Findings It was found that four of the five hypothesized technological factors are significantly
related to the success of ERP implementation. They are: comprehensiveness of software
development/process integration plan; significance of age of IT infrastructure; comprehensiveness of
data migration plan; and extensiveness of system testing. Also, four of the nine hypotheses/
sub-hypotheses amongst the people factors are significantly related to the success of ERP
implementation. They are: blend of cross-functional employees in the team; extent of empowerment of
decision-making team; significance of morale of the implementation team; and exhaustiveness of user
training. The authors have found that ten of the 11 hypothesized organizational factors are significantly
related to the success of ERP implementation. They are: organisations adaptability to changes;
involvement of top management; degree of customization; efficiency of business process re-engineering;
exhaustiveness of contingency plans; clarity in definition of milestones; clarity in evaluation of
milestones; alignment of ERP package with business processes; comprehensiveness of implementation
strategy; involvement of consultant in implementation strategy; clarity of project status disclosure; and
appraisal of clients about ERP strategy.
Originality/value Though enough work has been done on implementing ERP systems in large
organizations across the globe, the small and medium-sized firms of India are largely left untouched.
Through this paper, the authors aim to find out the various critical factors that any of these SMEs
should keep in mind when planning the implementation of an ERP system.
Keywords India, Small to medium-sized enterprises, Large enterprises, Multinational companies,
Management, Performance management, Resource management, Critical success factors,
Enterprise resource planning
Paper type Research paper

Some preliminary work of this paper appeared in the Proceedings of The 2nd IEEE International
Conference on Information Management and Engineering (ICIME) 2010, held April 16-18, 2010,
in Chengdu, China.

Journal of Modelling in Management

Vol. 8 No. 1, 2013
pp. 103-122
q Emerald Group Publishing Limited
1746-5664
DOI 10.1108/17465661311312003

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1. Introduction
After the opening up of Indian economy in 1991, Indian economy has consistently been
one of the fastest growing economies in the world. Since then India has seen a lot of
first generation entrepreneurs venturing into business. Most of these successful
entrepreneurs with time have observed increasing trends, in both the scale of their
operation as well as the size of their company.
Traditionally, small and medium enterprises (SMEs) have played a major role in
economic growth across the globe. They are major contributors to national economies
in terms of their contribution to employment, production and exports. Indian SMEs
also have the same strategic importance. With the growth in business, the need for
superior technology as well as planning tools are required and typical enterprise
resource planning (ERP) products cater to these requirements. With different size and
scales of operations of the companies the requirements and expectations from any ERP
product change significantly, this difference can be in multiple factors including span
of operations, process reengineering, resource availability, etc. there can be multiple
reasons for these differences ranging from the flatter structure, leaner decision making
team to simpler or limited operations.
An ERP system is an enterprise wide packaged software system that helps an
organization to manage and effectively use of its resources (materials, human resources,
finance, etc.) by providing an integrated solution for its information-processing needs.
It supports a process-oriented view of an organization and standardizes business
processes. Even when ERP systems can bring competitive advantage to organizations, it
is the high failure rate in ERP implementation that is the major concern across the
industries (Davenport, 1998) where it is implemented.
This paper aims at improving the understanding of ERP implementation using a
survey based statistical study. Primarily, we have attempted to address the following
question:
.
What are the critical success factors (CSF) for ERP implementation in SMEs in
India and how are these factors different from the factors for larger Indian
organizations and the global organizations?
The outline for the paper is as follows: in Section 2, we talk about the background and
motivation for this work. In Section 3, we discussed about the literature review done to
form the basic structure of the possible success factors. Post that we identified the
perceived industry success parameters. In Section 5, we hypothesize the various success
factors. In Section 6, we describe our research methodology and finally in Section 7
talks about the findings from the survey we administered for this research. At the end
we gave the managerial implications of this study followed by conclusion.
2. Background and motivation
Based on our literature review we found that there was a lot of work done on identifying
CSF for implementing ERP across the globe and these factors do change with changing
geographical location of the organization that are getting ERP implemented. In our
extensive literature review of 85 research papers and articles we found that no work
was done on Indian SME sector, even when it is the one the fastest growing sector of the
country. In this section we tried to identify and categorize the key critical factors based
upon our literature review and experience based on our interviews of industry experts.

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ERP solutions provide lot of business benefits to the organizations; still they have a
high failure rate. Thus, there is a need for greater understanding of the CSF of
implementation of ERP package (Somers et al., 2000). Moreover, due to smaller pocket
size of the SMEs and high switching and implementation cost of ERP systems, the
stakes are even higher. So to safeguard this segment we did an extensive literature
review using internet and various databases of published works.
Many studies had been conducted to identify critical factors that determine the
success of ERP implementation, with various papers doing empirical studies for the
key factors. Several studies have identified the various issues that an organization
faces, that hamper the success of ERP implementation (Finney and Corbett, 2007;
Holland et al., 1999; Bingi et al., 1999; Rosario, 2000; Zuckweiler and Lau, 2003;
Stefanou, 1999; Sumner, 1999; Siriginidi, 2000a, b; Motwani et al., 2002; Mandal and
Gunasekaran, 2003; Holland and Light, 1999).
Roberts and Barrar (1992) in the earliest studies on the matter had identified the
importance of a stable running business and process reengineering for ERP
implementation. Buckout et al. (1999) stated the issues regarding the strategic choices
and implementation issues that led to failure. Falkowski et al. (1998) in their article
highlighted importance of communication at various levels in the organization.
According to Wee (2000), overall architecture for ERP should be formulated before
starting its deployment, thus preventing reconfiguration at various stages. Other
papers indicated that the use of proper and formal modelling methods, tools and
architecture will be useful in ensuring ERP success (Murray and Coffin, 2001; Scheer
and Habermann, 2000).
Shanks et al. (2000) highlighted importance and difference in people component of
ERP implementation with his study on different success factors for implementation in
China and Australia. Ngai et al. (2008) also talked about the importance of national
culture and country-related functional requirements. Sheu et al. (2004) highlighted the
differences between the cultural legacies of various countries and hence, the impact on
peoples factor from location to location. Tarafdar and Roy (2003), in their study found
out the kind of issues that a typical Indian firm usually faces while implementing an
ERP system.
Some papers highlighted the importance of organization, its participation, support
from the top management and proper communication in implementing the project can
help in reducing the failure rate of ERP implementation (Motwani et al., 2008;
Yusuf et al., 2004). Then others talked about the challenges for the ERP
implementation like flexibility of the system and global implementation (Gupta, 2000).
Lin et al. (2006) addressed CSF for ERP implementation using total quality
management techniques like quality function deployment. Lee and Kang in their
study about ERP implementation in an oil seal manufacturing company emphasized on
the fact that success of implementation depends upon the attitude of the staff towards
the ERP project. They should view it as a process innovation rather than the mere
automation of existing process. Paper also stressed on the fact that post
implementation support also plays a crucial role in determining the overall success
(Trimi et al., 2005).
Ferratt et al. (2006) in their article have concluded that sticking with the project
management basics and adopting the best practices contribute significantly to the
success of ERP implementation.

Identifying
success factors

105

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Though enough work has been done on implementing ERP systems in large
organizations across the globe, but the small and medium-sized firms of India are
largely left untouched. Through this paper we aim to find out the various critical
factors that any of these SMEs should keep in mind when they plan to get ERP system
implemented in their firm.

106

3. Success parameters
In this section we will be discussing about the key parameters that are considered for
identifying whether the ERP implementation is a success or a failure. These
parameters are given below.

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Project completion in budget

It is a crucial factor in determining the overall success of the ERP implementation,
since if the allocated budget is exceeded there is a pressure to reduce the cost on
downward phases like training, etc. which are core for implementation project. In a
study conducted by an independent consulting firm Panorama Consulting Group
(2010) involving a survey spanning over 1,600 organizations that have selected or
implemented ERP within the last four years, it was found that more than half of the
implementations ended up overshooting the planned budget. It was also interesting to
note that only 8.6 percent of the implementations were completed with less than the
allocated budget (Figure 1).
Project completion in stipulated time frame
Another big cost to the companies comes in terms of the delays in implementation of
the package, thus causing the delay in getting the positive returns from the ERP
software and also a huge delay in the break-even time. In the same study by Panorama
Consulting, it was found that more than 1 of every three cases of the ERP
implementations exceeded the stipulated time frame as decided at the start of the
project. Hence, the metric of project completion in stipulated time frame was considered
for determining the success or failure of an ERP implementation (Figure 2) (Panorama
Consulting Group, 2010).
High business benefit realization
Another important parameter is the business benefit realization of the package. During
the sales pitches there are lot of promises made, but by the end of project
implementation it is realized that the extent of business benefits realized are not as

40.0%
Over Budget
51.4%

Under Budget
On Budget

Figure 1.
Budget factor for ERP
implementation

8.6%
ERP Vendor Analysis Report, Panorama Consulting

21.5%

Identifying
success factors

35.5%

Longer than Exp.

As Expected
Shorter than Exp.

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43.0%
ERP Vendor Analysis Report, Panorama Consulting

107

Figure 2.
Time schedule adherence

many as were perceived initially. In the same study, it was also found that nearly two
of every three implementations were not able to realize even half of the business
benefits. Hence, a high business benefit realization was considered as a parameter for
classifying the success or failure of an ERP implementation (Figure 3) (Panorama
Consulting Group, 2010).
4. Success factors
In this section, we propose a framework to address the research question after
reviewing research papers previously published on ERP. We have proposed a set of
hypotheses subsequently it will be validated using the data collected from the survey.
CSF are those factors or conditions which are the most important for successful
implementation of ERP. After doing literature review of more than 70 research papers,
we have categorised the CSF cited in them into three broad categories, namely,
organisational factors, technological factors and people factors.
Organisational factors
Change management culture and program. The commitment of an organization to
change influences the implementation process significantly. Cultural and structural
changes encompassing the organization should be managed, which includes the
internal staff and the organization (Rosario, 2000). In many of the ERP failure cases, it
had been observed that whenever an ERP deployment overruns the stipulated budget,
the cost cutting axe falls on downward activities like training. Proper training should
be provided to the users of the ERP system as they would now be making decisions
38.0%
Fail to Realize 50% +
Realize 50% +
62.0%
ERP Vendor Analysis Report, Panorama Consulting

Figure 3.
Business benefit
realization of ERP
implementation

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108

which would affect many other business functions rather than just one. Also there
should be more involvement of the end-users in design and implementation phase of
new business processes and ERP system to help them understand how their roles
would be experiencing a change by the introduction of ERP system (Bingi et al., 1999;
Holland and Light, 1999).
Top management support. Top management has to play a leadership role which is
driven by the commitment for the organization. The attitude of top management, their
involvement and willingness, to a large extent determines the priority and resource
allocation to the project. The need for having a senior management people who could
foresee any glitches that might occur in future and be involved in strategic decisions
making (Motwani et al., 2002; Sheu et al., 2004) is also expressed.
BPR with minimum customization. Large amount of process re-engineering is
required to leverage the best out of an ERP system. Organizations should be ready to
align their processes to match the software in order to align to industry best practices
and minimize amount of customizations needed. Large-scale customization of
ERP software is generally done due to reduced compliance and understanding of best
practices. Customization can render the ERP system virtually handicapped to switch
to newer available upgrades (Rosario, 2000). Morton and Hu (2008) talked about
the importance of BPR and organizational fit between company and ERP, for its
implementation success.
Business plan and vision. An information system that spans the whole enterprise
needs a well-defined business plan and vision to maneuver the direction of the
implementation (Buckhout et al., 1999). The goals should be quantifiable and planning
should also include certain element of risk and quality management (Mandal and
Gunasekaran, 2003). Business plan should also include benchmarking internal and
external best practices for ERP implementation (Al-Mudimigh et al., 2001).
Project management. Project management involves, clear outlining of milestones and
critical paths along with the training and HR plan and creation of steering committee
which includes top level management from business functions. The steering committee
would be involved in the selection of ERP package, tracking the implementation
progress and managing relationships with external consultants (Nah et al., 2001; Somers
and Nelson, 2001). There should be an active monitoring of the status of milestones and
targets in order to check progress of the project. Roberts and Barrar (1992) indicated the
following two measures that may be used:
(1) project management-based criteria should be used to measure against
deadlines, quality and budget; and
(2) operational criteria that should be used to track the production system.
Communication. It includes the disclosure of project progress to the organization and
its stakeholders using meetings, newsletters and other modes of communication
(Mandal and Gunasekaran, 2003; Falkowski et al., 1998; Shanks et al., 2000).
Implementation strategy and timeframe. A phased approach to ERP implementation
had been cited by many as one of the key success factors. Other decisions that need to
be taken are whether the implementation should be centralized or decentralized and the
advantages of introducing a Greenfield site (Siriginidi, 2000a, b).
Project cost planning and management. Usually due to the nature of ERP
implementations, there are costs associated which are unforeseen and hence the overall

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project cost might increase. Hence, a flexible budget policy is recommended to counter
the various contingencies (Ribbers and Schoo, 2002).
Client consultations. Researchers have also emphasized on the need for an
organization to keep its clients well informed of the projects to avoid misleading
assumptions and speculations regarding the project (Al-Mudimigh et al., 2001).
ERP selection. ERP selection plays a crucial role in determining the success of
implementation. One important thing to note here is that the system must be aligned
with the business processes and the ERP that is closest to the requirement should only
be used (Chen, 2001).
Consultant selection and relationship. Involvement of an external ERP consultant in
implementation team is considered as one of the necessities of an ERP implementation.
However, knowledge should be shared by the consultant to the company in order
to minimize the reliance on the consultant and improved success probability
(Motwani et al., 2002).
Technological factors
Software development, testing and troubleshooting. Taking into account the most
important needs of the implementation, the overall ERP architecture should be
established well before the deployment. To ease the process; rigorous and sophisticated
software testing should be performed. To leverage the full potential of the ERP
implementation, integration of the in-house systems with the ERP system is required.
Organizations should strive to build a middle-layer interface in case none exists
(Bingi et al., 1999; Zuckweiler and Lau, 2003).
Appropriate business and IT legacy systems. The more is the complexity of the
legacy systems, the more is the extent to which changes in technology and
organization is required. Also, an organization which is more responsive to change can
reduce some of the difficulties resulting from the complex systems (Siriginidi, 2000a, b;
Holland and Light, 1999; Roberts and Barrar, 1992).
IT infrastructure. The IT infrastructure of the organization, which encompasses the
IT architecture and skills is a significant factor in determining the success of the ERP
implementation and should be upgraded whenever required (Motwani et al., 2008).
Data conversion and integrity. One of the success factors cited was the accuracy
maintained during the data conversion process. The conversion process should be such
that it does not lead to loss of data during migration (Ngai et al., 2008; Yusuf et al., 2004).
System testing. Variety of test cases should be executed in order to perform a rigorous
system testing before the system goes live. This includes performing simulation and
executing test cases to check the robustness of the system (Yusuf et al., 2004).
People factors
ERP teamwork and composition. The ERP team should consist of best and brightest
brains in the organization. It should include cross-functional expertise and a blend of
internal staff and the external consultants. The amount of interaction between them
makes the contributing factor for the success of the project (Haines and Goodhue, 2000).
Project champion. A project champion should be a senior level person who has the
authority to define goals and give approval to changes. The person should also work
for the benefits of the organization and must continually handle conflicts and show
skills in tackling resistance from the people (Stefanou, 1999; Falkowski et al., 1998).

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110

Empowered decision makers. The need for the team to be authorized to make the
desired decisions within a given time frame is indispensible, in order to get the best out
of the ERP implementation (Gupta, 2000).
Team morale and motivation. A high level of sustainable employee morale and
motivation is required throughout the implementation. Also, staff retention is one of
the primary concerns, as losing staff in between the running project, had been cited as
one of the reasons for project failure (Mandal and Gunasekaran, 2003).
Training and job redesign. A hands-on training in development of IT skills should
be given to users of ERP system. To achieve this, training facilities should be
developed where project team and user training can be imparted. Also, restructuring of
staff should be done along with chalking out new compensation plans (Siriginidi,
2000a, b; Motwani et al., 2002; Mandal and Gunasekaran, 2003).
5. Conceptual framework and research hypotheses
Here we developed a framework and research hypotheses for three factors namely,
technological, people and organizational factors that are required for successful ERP
implementation (Figures 4-6).

Figure 4.
Conceptual model
for success factors
in technology

Figure 5.
Conceptual model for
success factors in people
related factors

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111

Figure 6.
Conceptual model
for success in
organization factors

Hypothesizing technological factors

HT1a. The more comprehensive the software development plan, the better is the
success rate of ERP implementation.
HT1b. The more comprehensive the process integration plan, the better is the
success rate of ERP implementation.
HT2.

The stable the legacy system is the better is the success rate of ERP
implementation.

HT3.

The newer the IT infrastructure of the organization is, the better is the
success rate of ERP implementation.

HT4.

The comprehensive is the data migration plan, the better is the success rate
of ERP implementation.

HT5.

The rigorous the system testing is before the system goes live, the better
is the success rate of ERP implementation.

Hypothesizing peoples factors

HP1a. The more balanced the team is the better is the success rate of ERP
implementation.
HP1b.

The higher the interaction between the internal staff and external
consultants, the better is the success rate of ERP implementation.

HP2.

The more experienced the project champion is, the better is the success rate
of ERP implementation.

HP3a. The more empowered the team is to make decisions; the better is the
success rate of ERP implementation.

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HP3b.

The flatter the hierarchy in the organization; the better is the success rate of
ERP implementation.

HP4a. The higher the team morale and motivation, the better is the success rate of
ERP implementation.

112

HP4b.

The lesser the employee attrition is, the better is the success rate of ERP
implementation.

HP5a. The more exhaustive the user training is, the better is the success rate of
ERP implementation.

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HP5b.

The longer the user training is, the better is the success rate of ERP
implementation.

Hypothesizing organisational factors

HO1.

The more adaptive the organization is to change, the better the success rate
of ERP implementation.

HO2.

The more involvement of top management, the better the success rate of
ERP implementation.

HO3a. The lesser the amount of customization, the better the success rate of ERP
implementation.
HO3b. The more efficient the BPR is, the better the success rate of ERP
implementation.
HO4.

The better the planning is done for contingencies, the better the success
rate of ERP implementation.

HO5a. The more clearly are the milestones and goals defined, the better the
success rate of ERP implementation.
HO5b. The more clearly are the milestones and goals evaluated, the better the
success rate of ERP implementation.
HO6.

The more the ERP implementation aligns with the business process; the
better is the success rate of ERP implementation.

HO7.

The more comprehensive the implementation strategy, the better the

success rate of ERP implementation.

HO8.

The more the budget for unplanned activities, the better is the success rate
of ERP implementation.

HO9.

The more the involvement of consultant in the implementation phase, the

better is the success rate of ERP implementation.

HO10. The clearer the project status disclosure is, the better is the success rate of
ERP implementation.
HO11. The more an organization keeps its client apprised; the better is the success
rate of ERP implementation.

6. Research methodology
Research for this paper was conducted using a phased methodology having following
three phases.

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Phase 1: questionnaire designing

This phase involved design of questionnaire for testing the given hypotheses. Likert
scale, with five values ranging from very significant to very insignificant was
incorporated in questions for capturing the significance, a respondent attaches to a
particular factor. After the questionnaire was prepared, it was sent to eight ERP
industry experts including ERP consultants, ERP professors and business analysts for
pretesting. We got the replies along with the feedback for the questionnaire from six of
them. The changes suggested by these experts were incorporated into the survey form.
Phase 2: data collection
Phase 2 involved the collection of data based on the survey designed in the previous
phase. The survey was open for 51 days between 1 March 2010 and 20 April 2010. For
selecting the respondents, we used convenience sampling wherein only those persons
who were related with ERP implementation were selected. The survey was sent by
e-mail to 213 ERP professionals. The survey link was also posted on multiple ERP
communities on networking sites (linkedin.com, facebook.com and orkut.com). The
survey was mailed and posted multiple times on these e-mail ids and networking
portals.
The survey received responses from a total 204 respondents, but only 164 responses
out of them were complete, thus only they were considered for the analysis and
calculation.
Phase 3: survey data analysis
Phase 3 involved the analysis of the data obtained from phase 2. This section is divided
into two parts, i.e. the analysis of respondents profile and the other for evaluating the
hypothesis proposed above.
Respondents profile. Respondents to the survey ranged from diverse backgrounds
and demographic profiles. Respondents from 17 countries participated in the survey
with varying organization sizes and work profiles. Respondents included ERP
consultants, owners of SMEs, and employees of SMEs and ERP implementers. A brief
pictorial representation about the survey respondents is shown in Figures 7-9.
For the survey we got responses from a total of 17 countries which included both
developed countries like the USA, Japan, Norway, Sweden, etc. and the developing
countries like India, Israel and Bangladesh, etc. However, most of the responses came
from India only.
We had a mix of responses in terms of the organization size of the respondents.
Nearly half of the respondents were from the large implementing organizations, but
rest of the responses came from the people working in the organizations of all sizes
right from companies with less than ten people in the company to larger companies
with more than 500 employees.
Domain knowledge of the respondents also was equally distributed with nearly half
of the respondents working on ERP packages while the other half of the respondents
working in non-ERP domain which includes the owners, senior management and

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114

Figure 7.
Demographic profile
of respondents

Figure 8.
Respondents
organization size

Domain Expertise

Non-ERP
48%

Figure 9.
Domain experience
of respondents

ERP
52%

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end-users for the various ERP products implemented at their organizations.

The breakup of the profile of the respondents is shown in Figure 10.
Hypothesis testing parameters
For evaluation of the hypothesis the responses for the technological, people and
organizational factors the data was statistically analysed using a suitable data analysis
technique. The technique included use of the statistical z-test with the following
parameters:
.
Threshold value. The threshold value was set at a level of significant or higher.
Any value above the given threshold and within the given level of significance
was accepted in z-test.
.
Alpha (level of significance). It determines the probability of rejecting the null
hypothesis when in fact it is true. Here we have set alpha equal to 0.05.

Identifying
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115

The mean and standard deviation for the various factors considered in our hypothesis
are as given in Table I.
7. Survey findings
The results from the analysis done using the above mentioned parameters and analysis
are summarized as given in Table II.
Success factors of Indian SMEs
There are a total of 21 hypothesis/sub-hypothesises that were accepted for Indian
SMEs.
Technological factors. The only factor that was rejected was that of the stability of
the legacy system. The possible explanation for this can be that these days the
implementation teams lay a special stress on data migration plan. And even a
standardized migration plan templates are available that help in smoothing out the
complete migration activity. Thus, the risk of implementation failure is reduced by a
significant factor, so it is possibly not considered as a CSF.
People factors. In people factor a total of five hypothesis/sub-hypothesises were
rejected in the analysis based on the survey results.

Figure 10.
Profile break-up
of respondents

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Category
Technological factors

116

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People factors

Organizational factors

Table I.

Hypothesis

Minimum score

Maximum score

Mean

SD

HT1a
HT1b
HT2
HT3
HT4
HT5
HP1a
HP1b
HP2
HP3a
HP3b
HP4a
HP4b
HP5a
HP5b
HO1
HO2
HO3a
HO3b
HO4
HO5a
HO5b
HO6
HO7
HO8
HO9
HO10
HO11

1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
2.00
1.00
1.00
2.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
2.00
1.00
2.00
1.00
1.00
1.00
2.00
1.00

5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00
5.00

3.9695
4.2317
3.5427
3.8293
4.1402
4.2256
4.0488
3.8841
3.8780
4.0549
3.4146
4.0122
3.7439
3.8720
3.1159
4.1280
4.0976
4.0488
4.0488
3.8841
4.1098
4.0915
4.1707
4.0732
3.7805
3.8963
3.9451
3.8293

0.78657
0.81095
0.85336
0.80344
0.79018
0.77004
0.77384
0.80945
0.78154
0.74515
0.89923
0.70917
0.84811
0.79997
0.84650
0.71920
0.87374
0.76587
0.67201
0.71272
0.72647
0.70766
0.71453
0.68785
0.75168
0.67940
0.70278
0.75624

We always had an intuitive feeling that due to smaller structure of the SME
organizations and a fewer people working at the managerial and senior managerial
roles make the section less relevant compared to its importance for other larger
organization. This point is proved by rejection of hypothesis for interaction between
internal and external consultants.
With comparatively less comprehensive operations of SMEs the amount of
experience required for the project champion was also not a very important and critical
to the projects success.
It was also observed during the analysis that employee attrition is not considered as
a success factor as knowledge management processes and the knowledge transfer
sessions that are the rule in the industry now, help in minimizing the loss of knowledge
in the company due to loss of an employee.
When we consider the exhaustiveness of the user training, the results showed that
the user training should not be an exhaustive training. Indeed according to the survey
results most ERP professionals believed that ideally the training should be of a
medium duration and depth, so that the people who will be working on the ERP
package are aware of the general and frequently used functionalities and do not feel
like aliens to the package, however the results also inferred that the training should not
be very exhaustive, long and detailed.

Large
Indian firms

Global
firms

Comprehensiveness of software
development plan
Comprehensiveness of process
integration plan
Stability of legacy systems
Significance of age of IT
infrastructure
Comprehensiveness of data
migration plan
Extensiveness of system testing

x
U

x
x

x
x

Blend of cross-functional employees

in the team
Interaction of internal and external
consultants
Experience of project champion
Extent of empowerment of decision
making team
Flatness of hierarchy in
implementing organisation
Significance of morale of the
implementation team
Effect of employee attrition
Exhaustiveness of user training
Duration of user training

x
U

U
U

x
U

x
U
x

x
U
x

x
x
x

Organisations adaptability to
changes
Involvement of top management
Degree of customization
Efficiency of business process
re-engineering
Exhaustiveness of contingency
plans
Clarity in definition of milestones
Clarity in evaluation of milestones
Alignment of ERP package with
business processes
Comprehensiveness of
implementation strategy
Budget for unplanned activities
Involvement of consultant in
implementation strategy
Clarity of project status disclosure
Appraisal of clients about ERP
strategy

U
U
U

U
U
U

U
U
U

U
U
U

U
U
U

U
U
U

x
U

x
x

x
x

U
U

U
x

U
x

Category

Hypothesis Factors

Technological
factors

HT1a
HT1b
HT2
HT3

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Indian
SMEs

HT4
HT5
People factors

HP1a
HP1b
HP2
HP3a
HP3b
HP4a
HP4b
HP5a
HP5b

Organizational
factors

HO1
HO2
HO3a
HO3b
HO4
HO5a
HO5b
HO6
HO7
HO8
HO9
HO10
HO11

Notes: U hypothesis is accepted; x hypothesis is rejected

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117

Table II.

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Organizational factors. In the organizational factors, all the factors were accepted as
success factors for SMEs except for budget for unplanned activities the possible reason
for this can be that due to non complex and non exhaustive requirements of the SMEs the
need for unplanned activities is quiet low. In all, 21 factors emerged out as success
factors for the SMEs.

118

Indian SMEs vs Indian large organizations

When compared to Indian SMEs, only 19 hypotheses/sub-hypotheses were considered
statistically significant for success amongst the large organizations.
In technological factors, we can see that age of the IT infrastructure emerges out as
a success factor for Indian SMEs but not for Indian larger organizations, this can be
because the larger organizations have much higher recurring budget for their IT
division and thus for them to provide the IT infrastructure which can support the latest
ERP packages is much more easier compared to the Indian SMEs who have a very little
or limited budget for their no competence divisions.
In the organizational factors, the interaction between the internal staff and external
consultants is amongst the key success factor for Indian large organizations but not for
Indian SMEs. These results were not an aberration from the anticipated factors as for an
Indian SME, since the size of the organization is small there is little need felt for
explicit meetings between project stakeholders, usually progress on the ERP project is
known to everybody and hence team interaction was expected to be ruled out as a
success factor.
Also when we consider the importance of the project champion for a large
organizations ERP deployment, the knowledge and exhaustiveness of the experience
that the project champion must have is of prime importance as the amount as there is a
lot of complex dependence and interactions at all levels both inside each module and
also during the integration of various modules.
Going on similar rationale, in the organizational factors, exhaustiveness of
contingency plans, involvement of consultant in implementation strategy and appraisal
of clients about ERP strategy are success factors for Indian SMEs but not for Indian
large organizations.
Indian SMEs vs global trend
There were just 16 hypotheses/sub-hypotheses which were proved statistically
significant to be considered as success factors globally as compared to 21
hypotheses/sub-hypotheses for Indian SMEs.
If we look at the comparison between the Indian SMEs and the global trend, in the
technological and people factors, only significance of age of IT infrastructure and
exhaustiveness of user training figured out as success factors for Indian SMEs but not
globally.
The differences in the organizational factors for Indian SMEs vs the
global trends were quite noticeable as the success factors for organizational factors
globally are in line with the factors considered in the Indian large organizations
and even the possible explanation for the difference between the implementation
globally and in SMEs would be more or less in line with that mentioned for the
Indian large organizations. Involvement of consultant in implementation, appraisal
of clients and exhaustiveness of contingency plans were the factors that were

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considered as crucial for success for Indian SMEs but they were not considered
so for organizations globally.
Managerial implications
The overall goal of this work was to identify CSF of implementing ERP in SMEs in
India from the perspective of all stakeholders involved. The intended benefits for
various stakeholders are given below.
Benefits for the SMEs. As the SMEs are a lot more risk averse for there non-core
competence processes. This study will help them to have a timely completion of the
implementation thereby resulting in reduction in unplanned cost as well as cost
escalations and schedule overruns that happen with time. Second, an overall higher
success rate and return on investment is achieved in switching to a new ERP. So in all
this study will help them achieve the returns from their investments much faster, and
more secure than the normal traditional implementation practices.
Benefits for the implementing organisation. As the SMEs are becoming more aware
and have started spending much more on the IT needs of the organization than ever
before, so with the help of the success factors identified, companies can plan for the
implementation in a more systematic way and more strategically thus reducing time
and cost overruns and in turn will help them achieve a higher resource utilization and
profits that while implementing it in the traditional method.
Benefit for the employees. Most employees are quiet reluctant to change, and even more
when they are not aware of what is happening and why it is happening. With the help of
this study the factors are identified that will help the higher management to decide how
much information and training is to be provided to the employees. So if implemented
properly in the end employees will feel more empowered and will have reduced stress
levels and will get a boost in their motivation levels.
8. Conclusions
The overall goal of this work was to advance the amount of research in the area of
Implementing ERP packages in Indian SMEs. This was done by initially identifying the
factors that can lead to success of ERP implementation. Post this we used a survey based
ex post facto study approach by identifying the success factors from the perspective of
both ERP implementers and the owners and employees of various SMEs. We also
compared the differences found from our study between the success factors of SMEs
against the large organizations and the global trends.
First the hypothetical framework was developed and then different ERP implementers
and the owners and employees of various SMEs were approached with closed ended
questions. The responses were obtained from various industry sectors, including those
having the primary line of business as computer related (hardware/software/IS/MIS),
consulting, banking/insurance, health care, aerospace, manufacturing, etc. The
respondents belonged to both small and large-sized organizations and teams.
Responses came from all role types software developers/testers and management
level employees.
We conducted a large-scale empirical study. There had not been a lot of research for
SMEs and virtually no work done for Indian SMEs. The feedback we received while
conducting the survey has been overwhelming. Many of the respondents who are
also experts in this area have shown interest in the work and its results.

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120

Our research contribution can be summarized as follows.

Technological factors
We have found that four of the five hypothesized technological factors are significantly
related to the success of ERP implementation. They are comprehensiveness of software
development/ process integration plan, significance of age of IT infrastructure,
comprehensiveness of data migration plan and extensiveness of system testing.
People factors
We have found that four of the nine hypotheses/sub-hypotheses amongst the people
factors are significantly related to the success of ERP implementation. They are blend
of cross-functional employees in the team, extent of empowerment of decision making
team, significance of morale of the implementation team and exhaustiveness of user
training.
Organizational factors
We have found that ten of the 11 hypothesized organizational factors are significantly
related to the success of ERP implementation. They are organisations adaptability to
changes, involvement of top management, degree of customization, efficiency of
business process re-engineering, exhaustiveness of contingency plans, clarity in
definition of milestones, clarity in evaluation of milestones, alignment of ERP package
with business processes, comprehensiveness of implementation strategy, involvement
of consultant in implementation strategy, clarity of project status disclosure and
appraisal of clients about ERP strategy.
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Appendix. Survey questionnaire
Survey questionnaire has been recreated as a Google doc attachment that can be accessed
through the link: http://bit.ly/QiciRD
Corresponding author
Subhas C. Misra can be contacted at: subhasm@iitk.ac.in

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