Critical Success Factors Affecting an ERP System Implementation

Abstract

Under the pressure to proactively deal with the radically changing external environment, many enterprises have changed their information system strategies by adopting application software packages rather than in-house development. Therefore many organizations have embarked upon the implementation of Enterprise Resource Planning (ERP) systems. A successful ERP project can cut the fat out of operating costs, generate more accurate demand forecasts, speed production cycles, and greatly enhance customer service all of which can save a company millions of dollars over the long run. On the other side when ERP systems fail it s often very fatal for the finances in those companies and according to The Gartner Group 70 percent of all ERP projects fail to be fully implemented. We must therefore ask ourselves the critical question, What are the critical success factors affecting an ERP system implementation? To help answer this question, this thesis intends to investigate how and why ERP system implementations fail or succeed. This is done by performing an extensive literature study and by performing a case study at two enterprises. The two enterprises, Matiq and SAP, provided representatives. Interviews were conducted with these representatives and are the main source of the data collected in the case studies. A quantity of articles have been chosen to support the foundation of the 10 critical success factors which have been identified. The research proposes the following critical success factors affecting an ERP system implementation: technical fit, organizational fit, strategic fit, Business Process Reengineering and customization, top management support and project team, project planning, training, testing, resistance and ease of use and competitive pressure. These factors will be presented stepwise and further discussed as well as related with the two case studies. The main contributions of this thesis is clarifying which factors contribute to success in an ERP implementation and which factors are not critical for the success of an implementation. This thesis can also serve as guidance for organizations which are planning to implement an ERP system.