Critical Success Factors for ERP Implementation: A Detailed Report

This report delves into the critical success factors (CSFs) for successful Enterprise Resource Planning (ERP) implementation. It emphasizes the importance of clear goals and objectives, top management support, and a dedicated project champion to drive the process. The report highlights the necessity of user education and training to ensure system adoption, along with selecting an appropriate ERP solution that aligns with the enterprise's needs. It also stresses the significance of suitable software and hardware, effective intradepartmental communication, and proactive change management to mitigate resistance and ensure a smooth transition. The application of these CSFs is discussed, providing practical insights for organizations aiming to maximize the likelihood of a successful ERP implementation. The report references key academic sources to support its findings.

Enterprise Resource Planning (ERP) is set of software that allows planning and implementation
of all the resources of an enterprise such that the smallest and the largest activities are in
alignment with the goals of the organization. As per Ragowsky & Somers (2002), a properly
selected and implemented ERP system can provide significant business advantages including
reduction in inventory and raw material costs. Also, lead time, production time and productions
costs can be reduced. We note that ERP implementation is a costly and time-consuming
endeavor (Sumner, 2008). Ragowsky & Somers (2002) also claim that despite best intentions,
ERP implementations often fail. The reasons for these include poor planning or poor
management, change in business goals during the project and lack of business management
support (Umble, Haft, & Umble, 2003). In this memo, we will detail criteria for success and how
they apply during implementation of an ERP.
As per Somers & Nelson (2001), for analyzing and ensuring the success of an ERP
implementation, we study Critical Success Factor (CSF). The CSFs are as follows:
1. Clear Goals and Objectives: Something that the other top CSFs build upon is the clear
goals and objectives. This is because without a clear objective, the enterprise is not clear
what they want and without clear goals, there is no containment of scope and scope creep
and thus the attendant delays and possibilities of failure become more of a possibility.
Such a clear definition also aids in verifying success.
2. Top Management Support: Many authors agree that top management support is the most
important CSF for an ERP (Somers & Nelson, 2001) (Zhang, Lee, Zhang, & Banerjee,
2003). Since ERP is a highly integrated system, thus its success requires cooperation
from all components of the business and only the top management can prove effective in
aligning the complete organization with the goals, settling disputes and clearing any
doubts. The top management provides the leadership and the resources, both of which are
essential for ERP's success.
3. Project Champion: An executive level official of the enterprise who understands the
processes and functioning of the company in detail, with an interest in seeing the ERP
implementation to success is essential for the successful implementation of an ERP, as
per Somers & Nelson (2001). This allows the top management to have a single point-of-
contact for the ERP implementation as well as that individual can effectively lead,
facilitate and market the ERP to users.
4. User Education and Training: This is also a criteria on which many authors agree
(Somers & Nelson, 2001) (Zhang, Lee, Zhang, & Banerjee, 2003). As per Zhang, Lee,
Zhang, & Banerjee (2003). education and training of the user in the newly implemented
ERP system is essential to make the user who is supposed to be using the system to
complete his day-to-day tasks is made answerable for ensuring that the system performs

to expectations.
5. Selection of an Appropriate ERP Solution: The selection of an ERP solution which fits
the enterprise's information needs and processes is important. This selection dictates the
budget, timeframes, goals and deliverables and Somers & Nelson (2001) argue that
selecting an inappropriate ERP solution will end up committing the enterprise to a
solution which does not fit the enterprise's strategic goal or business processes.
6. Suitability of Software and Hardware: As per Somers & Nelson (2001), most enterprises
prefer to buy off-the-shelf ERP systems as they understandably lack the in-house
experience. However, not all ERP systems are built alike and each usually has some
requisite software and hardware requirements and compatibilities. In addition, none
meets the complete requirements of the enterprise out-of-the-box. Thus to minimize
implementation difficulties and maximise chances of success, an analysis of requirements
to shortlist those matching the enterprise's structure most closely should be done.
7. Intradepartmental Communication: Since ERP involves each component of business,
thus its success depends upon strong coordination and sharing of goals across
departments (Willcocks & Sykes, 2000). This follows from the CSF of top management
support, as only the top management is capable of bringing the rank and file of the
enterprise to toe the line.
8. Change Management: ERP implementations by their very nature, uproot the existing way
of working and change from a comfortable routine is something the rank and file of any
organisation detest. Thus, one CSF for ERP implementation is managing the change and
guiding the staff take the resistance, confusion, redundancies and errors in stride (Somers
& Nelson, 2001)
Now, we will briefly discuss the application of these CSF to increase the likelihood of success in
the implementation of ERP:
1. Clear Goals and Objectives: This involves defining in clear terms the objectives of the
ERP implementation and the goals expected to be achieved. Care is to be taken that these
align with the enterprise-wide policies. Then, regular evaluation is done to ensure
progress is towards the stated goals and objectives only.
2. Top Management Support: For ensuring top management support, even before the
implementation begins, the top management has to decide if it really wants to go ahead
with this project. If they decide so, then a Project Champion, an officer in the executive
level is selected who is personally motivated to see this project to success and is deeply
aware of the processes of the enterprise. Then, regular updates are maintained via the

Project Champion regarding progress, expense etc..
3. Project Champion: This individual has to be from the Executive level of the enterprise so
that he can pull the strings and align all components of the business in the
implementation of the ERP. He will be leading the change process, handling the
implementation and marketing the ERP to users. Also, he will the point-of-contact for top
management about the ERP implementation.
4. User Education and Training: This is just as important as securing the top management
support is. This activity involves teaching the users hands-on how to use the new system
for the operations that they always do at work, reduce their resistance, clear their
confusion and sell the ERP system to them. Also, this ensures they become answerable to
ensure that the new system is working up to expectations.
5. Selection of an Appropriate ERP Solution: As discussed in this memo earlier, ERP
systems have many criteria which make them a better or worse fit for a particular
organization. In this activity, we will analyze the complete range of ERP solutions
available and taking inputs from the various departments, especially the IT department
shortlist to a handful of supplier who can then be evaluated in detail.
6. Suitability of Software and Hardware: As discussed in the previous point, this activity
requires a detailed analysis of the enterprise's hardware and software capability and
compatibilities. Then this is mapped to the shortlisted ERP solutions to find one which
fulfils the maximum requirements out-of-the-box, thus minimizing the customizations
required.
7. Intradepartmental Communication: With the authority of the Project Champion and the
top management, clear and open lines of communication are to be opened between
departments and hierarchies. Since ERP is supposed to uproot the entire existing system,
these lines of communication will be essential in allowing "cooperation and involvement"
(Somers & Nelson, 2001).
8. Change Management: ERP intends to replace the current working of the entire enterprise
- across departments and across hierarchies - and this is bound to create resistance,
confusion and all these come in the way of making ERP implementation a success. Under
this activity active steps will be taken to turn resistance into excitement for the new
system by selling the benefits, listening to people and clearing their concerns, and
ensuring that people feel included in the whole process. Acceptance by the rank and file
of the enterprise is one of the last tests of the ERP implementation.

References:
Arik Ragowsky, T. M. S. (2002). Enterprise resource planning. Journal of Management
Information Systems, 19(1), 11-15.
Sadagopan, S. (2003). Enterprise resource planning. Encyclopedia of Information Systems, 2,
169-184.
Somers, T. & Nelson, K. (2001). The impact of critical success factors across the stages of
enterprise resource planning implementations. Proceedings Of The 34Th Annual Hawaii
International Conference On System Sciences. http://dx.doi.org/10.1109/hicss.2001.927129
Sumner, M. (2008). Enterprise resource planning (1st ed., p. 13). India: Prentice Hall.
Umble, E. J., Haft, R. R., & Umble, M. M. (2003). Enterprise resource planning: Implementation
procedures and critical success factors. European journal of operational research, 146(2), 241-
257.
Willcocks, L. & Sykes, R. (2000). Enterprise resource planning: the role of the CIO and it
function in ERP. Communications Of The ACM, 43(4), 32-38.
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Zhang, L., Lee, M., Zhang, Z., & Banerjee, P. (2003). Critical success factors of enterprise
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Conference On System Sciences, 2003. Proceedings Of The.
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