Prof S V Bharthi - Final Report

Symbiosis Centre for Information Technology
(A constituent Institute of Symbiosis International University, estd. Under Section 3 of UGC Act 1956)
Challenges Faced during ERP Implementation in Manufacturing Industries: A case study approach.
By 12030241060 Aditya Nishant Vaddadi Information Security Batch (2012-14) Symbiosis Centre for Information Technology
(a constituent member of SIU Established under section 3 of the UGC Act 1956 vide notification No. F.9-12/2001-U.3 of the Government of India)

Acknowledgement
I would like to express my sincere gratitude towards my Faculty mentor Prof. S V K Bharathi, SCIT for her valuable inputs, encouragement and suggestions throughout the duration of my project. I would be always thankful for providing such a critical and crucial topic for the dissertation. The extensive help and insightful response from the industry experts helped me formulate a concrete conclusion to the dissertataion. I am thankful to all the Industry Experts who voluntarily participated in the survey and provided their valuable inputs. I would also like to thank our beloved and respected Dr. R.Raman, Director, SCIT, for providing me with the opportunity. Last but not the least I wish to take this opportunity to express a sense of gratitude and love to my parents and brother for their physical support, strength and help. Aditya Nishant Vaddadi MBA ITBM (2012-14)

Table of Contents
Acknowledgement ........................................................................................................................................ 2 Chapter 1: Introduction ................................................................................................................................ 4 1.1 1.2 1.3 1.4 Summary of Abstract .................................................................................................................... 4 Objectives ..................................................................................................................................... 5 Scope ............................................................................................................................................. 5 Methodology ................................................................................................................................. 7
Chapter 2: Review of literature ..................................................................................................................... 7 Chapter 3: Analysis of Work Done ............................................................................................................ 11 3.1 3.2 3.3 3.4 Analysis of Problem under Research .......................................................................................... 11 Alternative Solutions and their advantages & disadvantages. .................................................... 13 Proposed Solution ....................................................................................................................... 14 Technical Justification of the Solution........................................................................................ 15 Factor 1: Worked with functionality/maintained scope ...................................................... 15 Factor 2: Project team/Management support/Consultants .................................................. 16 Factor 3: Internal readiness/training.................................................................................... 18 Factor 4: deal with organizational diversity ........................................................................ 19 Factor 5: planning/development/budgeting......................................................................... 19 Factor 6: adequate testing .................................................................................................. 20
3.4.1 3.4.2 3.4.3 3.4.4 3.4.5 3.4.6 3.5
Possible Applications in the Industry.......................................................................................... 21 Case: Tata Steel ................................................................................................................... 21 Factor 1: worked with functionality/maintained scope ..................................................... 21 Factor 2: project team/management support/consultants ................................................ 22 Factor 3: internal readiness/training .................................................................................. 22 Factor 4: deal with organizational diversity ........................................................................ 23 Factor 5: planning/development/budgeting......................................................................... 23 Factor 6: adequate testing ................................................................................................... 23
3.5.1 3.5.2 3.5.3 3.5.4 3.5.5 3.5.6 3.5.7
Chapter 4 ..................................................................................................................................................... 24 4.1 4.2 Findings ....................................................................................................................................... 24 Recommendations ...................................................................................................................... 25

4.2.1 4.2.2 4.3
Implications for managers ................................................................................................... 25 Implications for future research .......................................................................................... 26
Conclusion ................................................................................................................................... 26
References & Bibliography......................................................................................................................... 27 Appendix ..................................................................................................................................................... 29 i) Survey Questions ............................................................................................................................ 29
ii) Analysis Sheet .................................................................................................................................... 31
LIST OF TABLES
Table 1 : Worked with functionality/maintained scope .............................................................................. 31 Table 2: Project team/management support/consultants ............................................................................. 32 Table 3: Internal readiness/training............................................................................................................. 32 Table 4: Deal with organizational diversity ............................................................................................... 33 Table 5: Planning/development/budgeting ................................................................................................. 33 Table 6: Adequate testing ........................................................................................................................... 33
LIST OF FIGURES
Figure 1 : A CSF model with strategic and Tactical factors, Source: (Holland and Light, 1999) ................ 8 Figure 2: Framework for ERP Implementation, Source: (Huang and Palvia, 2001) .................................... 9
Chapter 1: Introduction 1.1 Summary of Abstract

Enterprise resource planning (ERP) system has been one of the most popular business management systems, providing benefits of real-time capabilities and seamless communication for business in large organizations. However, not all ERP implementations have been successful. Since ERP implementation affects entire organizations such as process, people, and culture, there are a number of challenges that companies may encounter in implementing ERP systems. Some enterprises have applied ERP systems but the effectiveness of application is limited. Therefore, the purpose of my study is to find out the difficulties in implementing ERP systems, namely the business organization factors, people

factors, technical factors. And find the appropriate solutions for successful ERP implementation. This research will use a case study methodology to compare a successful implementation with an unsuccessful one. The result of this research would be a list of factors that facilitate or inhibit the success of ERP projects. In a nutshell, this paper gives significant suggestions in making a proper EPR implementation strategy, choosing the right ERP applied model and improving the success rate of ERP implementation.
1.2
Objectives
The purpose of my study is to find out the difficulties in implementing ERP systems, namely the business organization factors, people factors, technical factors. And find the appropriate solutions for successful ERP implementation. The result of this research would be a list of factors that facilitate or inhibit the success of ERP projects. In a nutshell, this paper gives significant suggestions in making a proper EPR implementation strategy, choosing the right ERP applied model and improving the success rate of ERP implementation.
1.3
Scope
ERP implementation is a socio-technical challenge that requires a fundamentally different outlook from technologically-driven innovation, and will depend on a balanced perspective where the organization as a total system is considered. ERP implementation is considered to rely on behavioral processes and actions (AlMudimigh et al., 2001). ERP systems are highly integrated and complex packages that bring information visibility across companies. The systems are capable of functioning as advertised; however, companies run into costly and sometimes fatal difficulties with the implementation and subsequent maintenance of these packages (Gargeya and Brady, 2005) According to The Gartner Group, 70 percent of all ERP projects fail to be fully implemented, even after three years (Gillooly, 1998). There is no single responsible or individual reason for failure or success of ERP implementation. There are two levels of failure (Gargeya and Brady, 2005):

1. Complete failures 2. Partial Failures In complete failure, project was stopped before implementation or cause serious financial and functional damages to the company. In partial failure company will gain some thin adjustments processes but it will have some disruptions in daily works (Gargeya and Brady, 2005). Gargeya and Brady (2005) state that an ERP success can be a complete
success - one in which everything goes off without a hitch, or one in which there are few alignment problems, resulting in minor inconvenience or downtime. Frequently, these situational circumstances that have to be ironed out in the weeks and months after the go-live date are not severe enough to disrupt the daily operations. Some of the blame for failures in ERP implementation lies with the enormous technical challenges of rolling out enterprise systems - these systems are profoundly complex pieces of software, and installing them requires large investments of money, time, and expertise. But the technical challenges, however great, are not the main reason enterprise systems failed. The biggest problems are business problems. Companies fail to reconcile the technological imperatives of the enterprise system with the business needs of the enterprise itself (Davenport, 1998). Simply putting ERP is not intended for every business (Gargeya and Brady, 2005). When considering the decision to invest in an ERP system, a business case must be developed to provide an understanding of ERP, and to formally assess the benefits that the company- as an individual entity apart from its competitors - can expect to achieve. The analysis must consider not only the obvious cost/benefit analysis, but also the non-financial factors. Non-financial benefits include information visibility and flexibility (Sandoe et al., 2001). ERP implementation costs are incurred in three areas: software, hardware, and personnel. The personnel (or the human resources) cost is by far the largest and most expensive, but at the same time has been the area given the least amount of consideration. The software and hardware costs are often easily quantifiable; however, the human cost is not (Davenport, 2000).

ERP implementation can reap enormous benefits for successful companies - or it can be disastrous for organizations that fail to manage the implementation process. We must ask ourselves two critical questions, How can ERP systems be implemented successfully? and What are the critical success factors for ERP implementation? (Holland and Light, 1999)
1.4
Methodology
The purpose of my thesis is somewhat exploratory since I wish to assess an ERP implementation in light of critical success factors and understand what is happening in an ERP implementation case. It is partly descriptive because it is necessary to have clear picture of the phenomena on which I wish to collect data prior to the collection of data and my research purpose is clearly structured. Also it is somehow explanatory, because sometimes it examines a situation or a problem in order to explain the relationships between variables. But it is mostly descriptive. The purpose of my study was to find information to answer my how and what questions. This research will use a case study methodology to compare a successful implementation with an unsuccessful one. Further, I want to collect and analyze new data, comparing it to existing theories and find if there are differences between my case success factors and those in literature.
Chapter 2: Review of literature

There have been a few papers recently published on the factors contributing to ERP implementation. Holland and Light (1999) consider strategic and tactical factors for implementing ERP and propose a critical success factor model.

Figure 1 : A CSF model with strategic and Tactical factors, Source: (Holland and Light, 1999) Dong (2001) proposed a conceptual model exploring the impact of top management on enterprise systems (ES) implementation. Aladwani (2001) described an integrated, process-oriented approach for facing the complex social problem of workers resistance to ERP systems. Huang and Palvia (2001) proposed ten factors (at the national/environmental and organizational level) concerning ERP implementation by making a comparison of advanced and developing countries. The national/environmental factors identified by them are economy and economic growth, infrastructure, regional environment, government regulations, and manufacturing strengths. They also noted that information technology maturity, computer culture, business size, business process re-engineering experience, and management commitment are the organizational level factors.

Figure 2: Framework for ERP Implementation, Source: (Huang and Palvia, 2001) In other papers Fitzgerald (1998) observes the limitation of the conventional evaluation methodology and proposes a multidimensional approach for evaluating information systems projects. The eight steps of this approach are: (a) identification of costs, (b) the contribution to business strategy (c) analysis of benefits, (d) second-order effects (e) flexibility (f) implement ability, (g) risk and (h) testing the business idea. Shankarnarayanan (1999) recommends the following criteria for evaluating ERP software: (a) functional fit with the Companys business processes, (b) degree of integration between the various components of the ERP system, (c) flexibility and scalability, (d) complexity; user friendliness, (e) quick implementation; shortened ROI period, (f) ability to support multi-site planning and control, (g) technology; client/server capabilities, database independence, security (h) availability of regular upgrades, (i) amount of customization required, (j) local support infrastructure, (k) availability of reference sites, (l) total costs, including cost of license, training, implementation, maintenance, customization and hardware requirements. Umble et al. (2003) identified 9 factors for implementing ERP.

1- Clear understanding of strategic goals 2- Commitment by top management 3- Excellent project management 4- Organizational change management 5- A great implementation team 6- Data accuracy 7- Extensive education and training 8- Focused performance measures 9- Multi-site issues
Nah et al. (2001) identified 11 factors that were critical to ERP implementation success. The 11 factors noted by them are:
1. ERP teamwork and composition; 2. Change management program and culture; 3. Top management support; 4. Business plan and vision; 5. Business process re-engineering and minimum customization; 6. Effective communication; 7. Project management; 8. Software development, testing, and troubleshooting; 9. Monitoring and evaluation of performance; 10. Project champion; and 11. Appropriate business and information technology legacy systems. Themistocleous et al. (2001), based on a survey of 50 respondents, underscored

the need for integration of existing systems with ERP applications in ERP implementation. Stratman and Roth (2002) through a questionnaire survey of 79 North American manufacturing users of ERP systems identified eight generic constructs (strategic information technology planning, executive commitment, project management, information technology skills, business process skills, ERP training, learning, and change readiness) that are hypothesized to be associated with successful ERP adoption. Gargeya and Brady (2005) by using a content analysis model and searching more than 100 articles and books propose following critical success factors for implementing ERP: 1. Worked with functionality / Maintained Scope 2. Project Team / Management Support / Consultants 3. Internal Readiness / Training 4. Deal with Organizational Diversity 5. Planning / Development / Budgeting 6. Adequate testing Gargeya and Brady (2005) proposed model seems the most complete model. So the model is selected for explanation.
Chapter 3: Analysis of Work Done

3.1 Analysis of Problem under Research
ERP implementation is a socio-technical challenge that requires a fundamentally different outlook from technologically-driven innovation, and will depend on a balanced perspective where the organization as a total system is considered. ERP implementation is considered to rely on behavioral processes and actions (Al-Mudimigh et al., 2001). ERP systems are highly integrated and complex packages that bring information

visibility across companies. The systems are capable of functioning as advertised; however, companies run into costly and sometimes fatal difficulties with the implementation and subsequent maintenance of these packages (Gargeya and Brady, 2005) According to The Gartner Group, 70 percent of all ERP projects fail to be fully implemented, even after three years (Gillooly, 1998). There is no single responsible or individual reason for failure or success of ERP implementation. There are two levels of failure (Gargeya and Brady, 2005): 1. Complete failures 2. Partial Failures In complete failure, project was stopped before implementation or cause serious financial and functional damages to the company. In partial failure company will gain some thin adjustments processes but it will have some disruptions in daily works (Gargeya and Brady, 2005). Gargeya and Brady (2005) state that an ERP success can be a complete success - one in which everything goes off without a hitch, or one in which there are few alignment problems, resulting in minor inconvenience or downtime. Frequently, these situational circumstances that have to be ironed out in the weeks and months after the go-live date are not severe enough to disrupt the daily operations. Some of the blame for failures in ERP implementation lies with the enormous technical challenges of rolling out enterprise systems - these systems are profoundly complex pieces of software, and installing them requires large investments of money, time, and expertise. But the technical challenges, however great, are not the main reason enterprise systems failed. The biggest problems are business problems. Companies fail to reconcile the technological imperatives of the enterprise system with the business needs of the enterprise itself (Davenport, 1998). ERP implementation can reap enormous benefits for successful companies - or it

can be disastrous for organizations that fail to manage the implementation process. We must ask ourselves two critical questions, How can ERP systems be implemented successfully? and What are the critical success factors for ERP implementation? (Holland and Light, 1999).
3.2 Alternative Solutions and their advantages & disadvantages.

Shankarnarayanan (1999) recommends the following criteria for evaluating ERP software: (a) functional fit with the Companys business processes, (b) degree of integration between the various components of the ERP system, (c) flexibility and scalability, (d) complexity; user friendliness, (e) quick implementation; shortened ROI period, (f) ability to support multi-site planning and control, (g) technology; client/server capabilities, database independence, security (h) availability of regular upgrades, (i) amount of customization required, (j) local support infrastructure, (k) availability of reference sites, (l) total costs, including cost of license, training, implementation, maintenance, customization and
hardware requirements. Nah et al. (2001) identified 11 factors that were critical to ERP implementation success. The 11 factors noted by them are: 1. ERP teamwork and composition; 2. Change management program and culture; 3. Top management support; 4. Business plan and vision; 5. Business process re-engineering and minimum customization; 6. Effective communication; 7. Project management; 8. Software development, testing, and troubleshooting; 9. Monitoring and evaluation of performance;

10. Project champion; and 11. Appropriate business and information technology legacy systems. Gargeya and Brady (2005) by using a content analysis model and searching more than 100 articles and books propose following critical success factors
for implementing ERP: 1. Worked with functionality / Maintained Scope 2. Project Team / Management Support / Consultants 3. Internal Readiness / Training 4. Deal with Organizational Diversity 5. Planning / Development / Budgeting 6. Adequate testing Gargeya and Brady (2005) proposed model seems the most complete model. So the model is selected for explanation.
3.3 Proposed Solution

This research intends to answer the questions What are the critical success factors for ERP implementation? Key findings of this interpretive study were derived from interviewees perceptions, literature review and secondary data review conducted on unpublished documents from the research site. For doing this research two research cases were selected and interviews along with a secondary data review were conducted. Through a case study comparison of a successful ERP implementation with an unsuccessful implementation, It was found that 9 of 12 identified CSFs from literature were mentioned as critical and others as important with regards to the interviewees perceptions. The following factors are mentioned as critical: Worked with functionality Maintained scope Project team Management support

Consultants Internal readiness Training Planning Adequate testing Following factors are mentioned as important, but not critical, mainly because control of them is very hard. Deal with organizational diversity Development Budgeting
3.4 Technical Justification of the Solution

3.4.1 Factor 1: Worked with functionality/maintained scope A crucial part of working with the ERP functionality is the ability to streamline operations. When implementing a system, many organizations fail to specify their organizational objectives. Job skills are raised by the requirements of the new, post-implementation company. Idiosyncratic ways of doing business, which were manageable, although most likely inefficient, under the old system, are no longer tolerated. Companies that do not understand these issues early on will face serious problems (Davenport, 2000). Even though the so-called vanilla approach is adopted by two-thirds of implementing companies, some customization will always be required in order to meet individual needs (Themistocleous et al., 2001). The key, it appears, is to know just how much to customize. The ability to implement ERP with minimal customization requires assistance from several other factors, primarily streamlining operations and re-engineering the business - both of which will help the organization to run in a more straightforward manner. Thorough planning is also a close partner, as it is threaded through the plans from scope to budgets (Gargeya and Brady, 2005). Important factor that begins at the project phase is BPR and minimum customization. It is inevitable that business processes are molded to fit the new system (Bingi et al. , 1999). Aligning the business process to the software implementation is critical (Holland et al. , 1999; Sumner, 1999). Organizations should be willing to change the business to fit the software with minimal

customization (Holland et al. , 1999; Roberts and Barrar, 1992). Software should not be modified, as far as possible (Sumner, 1999). Modifications should be avoided to reduce errors and to take advantage of newer versions and releases (Rosario, 2000). Process modeling tools help aid customizing business processes without changing software code (Holland et al. 1999). Broad reengineering should begin before choosing a system. In conjunction with configuration, a large amount of reengineering should take place iteratively to take advantage of improvements from the new system. Then when the system is in use reengineering should be carried out with new ideas (Wee, 2000). Quality of business process review and redesign is important (Rosario, 2000). In choosing the package, vendor support and the number of previous implementers should be taken into account (Roberts and Barrar, 1992). Maintaining scope is just as important for small companies as it is for large organizations. The approach for rolling out their implementation is another very important consideration. There is no evidence that any one way of implementation is better than another as a whole; however, one approach will be better for companies on an individual basis. There have been many widely publicized big bang successes, and many failures. The same is true for gradual (phased) rollouts, although these generally are not headline-grabbers (Gargeya and Brady, 2005). The phased rollouts take longer to complete, and are more expensive due to the additional time commitment; however, the approach does offer reduced business risk (Davenport, 2000). So the following characteristics for these factors can be identified: Worked with functionality: 1. Doing BPR and aligning the business processes with software. 2. Doing minimal customization to the software. 3. Considering vendor support and the number of previous implementations for choosing the package. Maintained scope: 1. Maintaining the initial scope. 2. Choosing best way of implementation on individual basis (big bang method or phased method). 3.4.2 Factor 2: Project team/Management support/Consultants The ERP team should consist of the best people in the organization (Buckhout et al. , 1999; Bingi et al. , 1999; Rosario, 2000; Wee, 2000; Nah et al., 2001). Building a crossfunctional team is also critical. The team should have a mix of consultants and internal staff so

the internal staff can develop the necessary technical skills for design and implementation (Sumner, 1999). Both business and technical knowledge are essential for success (Bingi et al. , 1999; Sumner, 1999). The ERP project should be their top and only priority and their workload should be manageable (Wee, 2000). Team members need to be assigned full time to the implementation (Wee, 2000). As far as possible, the team should be co-located together at an assigned location to facilitate working together (Wee, 2000). Following characteristics for these factors in this category can be identified: Project team: 1. ERP team should be cross functional, mix of consultants and internal staff. 2. Team should have both business (familiar with business functions and products) and technical knowledge. 3. The team should be dedicated to ERP implementation. 4. ERP team should be given compensation and incentives. Management support: 1. Highly support and approval from top management is required during implementation. 2. Senior management must be committed with its own involvement and allocating valuable resources. 3. New organizational structure should be established and communicated to employees. 4. Top management should set policies to establish new system. 5. In time of conflict between previous and new system managers should be in middle. Consultants: 1. Consultants should have in-depth knowledge of software. 2. Should be involved in different stages of implementation. 3. Consultants should have multiple skills covering functional, technical, and interpersonal areas. 4. Company should be able to manage well these consultants.

3.4.3 Factor 3: Internal readiness/training Gargeya and Brady (2005) state that people element must be handled on two levels. At one level, employees must be trained on the new system in order to use it to continue day-to-day operations. The second level is educational exposure. Managers must know and understand the implications of the system, and must come to a consensus about the changes that will take place. If they agree that change is necessary and possible, they can be charged with disseminating this information to their subordinates. If managers are not in agreement or collaboration, then there will be no enthusiasm, or buy-in, and there may even be active resistance (Davenport, 2000). The reinforcement of a team environment is critical to the overall success of an ERP implementation. Members of the project team should be encouraged to support each other and work toward common goals. This also leads to a cross-pollination effect, resulting in a more collaborative and self-sufficient mix of talent and responsibilities (Gargeya and Brady, 2005). Change management is important, starting at the project phase and continuing throughout the entire life cycle. Enterprise wide culture and structure change should be managed (Falkowski et al. , 1998), which include people; organization and culture change (Rosario, 2000). Not unexpectedly, the most common failure factor reported was that of readiness for change. Implementing an ERP system completely changes the culture within an organization, and many companies have found themselves hard pressed to accomplish this successfully (Gargeya and Brady, 2005). Internal readiness success factor is too broad that contains many of other factors like management support, budgeting, business process reengineering and etc., so for to avoidance of repeating these factors internal readiness will be consider as readiness for change. So factors for this category are: Internal readiness: 1. Organization and people should be ready for changes. 2. Users should be involved in design and implementation of business processes. 3. Education should be a priority from the beginning of the project, and money and time should be spent on various forms of education and training. 4. Training, re-skilling and professional development of the IT workforce is critical. Training: 1. Heavy investment in training and re-skilling of developers in software design and methodology.

2. A support organization meets users needs after installation. 3. Employees must be trained on the new system in order to use it to continue day-to-day operations. 3.4.4 Factor 4: deal with organizational diversity Organizations have many cultures. Individual branches of the same organization have their own ways of doing things, and each function/department operates with different procedures and business requirements. Not unexpectedly, the larger, more global companies cite their diversity as an obstacle to success (Gargeya and Brady, 2005). Individual units and groups are often companies of their own right, and do not wish to be assimilated into one corporate culture. Re-engineering of the business is required here, both on the people level, and on the operational level. This organizational diversity differs from factor #1 (worked with functionality/maintained scope) in that the company changes its culture, not just its processes. In addition to having important strategic implications, enterprise systems also have a direct, and often paradoxical, impact on a company's organization and culture. Identified factors for dealing with organizational diversity are: 1. Reengineering in both people and operational level in different business units. 2. Determining level of uniformity and choosing appropriate model (Single, global ES vs. Federalist model).
3.4.5
Factor 5: planning/development/budgeting Planning a sophisticated ERP project should not be taken lightly or with little forethought. As mentioned before, there are enormous potential costs associated with such an undertaking. In addition to the high costs paid out before the go-live date, there can and have been major expenses incurred by companies that were unable to fully develop a comprehensive plan. Planning should be closely identified with maintaining scope during an implementation. Cost overruns and developmental delays are costly, sometimes fatal results of ineffective planning (Gargeya and Brady, 2005). A clear business plan and vision to steer the direction of the project is needed throughout the ERP life cycle (Buckhout et al. , 1999). A business plan that outlines proposed strategic and tangible benefits, resources, costs, risks and timeline is critical (Wee, 2000). This will help keep focus on business benefits. Identified factors: Planning:

1. A clear business plan and vision to steer the direction of the project. 2. Business plan should outlines proposed strategic and tangible benefits, resources, costs, risks and timeline. 3. A clear business model and justification for the investment based on a problem and the change tied directly to the direction of the company. Development: 1. Interfaces for commercial software applications or legacy systems may need to be developed.
3.4.6 Factor 6: adequate testing
System testing has proven to be the key element of success for some companies and a direct cause of failure for others (Gargeya and Brady, 2005). Gargeya and Brady, (2005) argue that after months or years of development, it may be feasible to assume that both team members as well as executive management are tired of dealing with the project and just want it to be completed. The result of this myopic thinking, however, is that testing is reduced or ignored, and red flags are disregarded. Scheer and Habermann (2000) indicate that modeling methods, architecture and tools are critical. Requirements definition can be created and system requirements definition can be documented. There should be a plan for migrating and cleaning up data (Rosario, 2000). Proper tools and techniques and skill to use those tools will aid in ERP success (Rosario, 2000). This also proves the importance of another success factor top management support. Unrealistic fears of delaying the go-live dead line indicated that seniorexecutives were not completely in tune to the importance of completely testing the implementation; even that resulted in a slight delay. So important factors for testing are: 2. Vigorous and sophisticated software testing before go-live date is essential. 3. Troubleshooting errors is critical. 4. There should be a plan for migrating and cleaning up data.

3.5 Possible Applications in the Industry

3.5.1 Case: Tata Steel
TISCO proved to be different from the others by choosing ERP in the right time and implementing it in a proper manner. They have also reported a whooping profit and reduction of costs in the whole process. Another amazing fact is that they implemented it into the whole systems in one single spree. . Incase of the rare success organizations will experience effective results in their enterprise operations. TISCO has achieved that by way of meticulous handling and professionalism. The net results of their ERP software have been described to be pathbreaking and a trendsetting one. Following modules from SAP were selected and implemented:

Phase I - To Extend SAP in Works with FI, CO, MM, PP & QM Phase II - To implement SAP modules such as Asset Management & Budget management sub-modules of FICO, Plant maintenance, Human Resources, Production Optimizer (such as SAP APO) Phase III - SEM (Strategic Enterprise Management)
The company also plans to adopt the my SAP Customer Relationship Management solution to enhance its customer relationships in the near term and eventually realize its dream of a becoming the most efficient and competitive company in the world in its vertical.
3.5.2 Factor 1: worked with functionality/maintained scope
About worked with functionality factor, TATA STEEL tried to align its business processes to best practices that are most suitable for SAP. There were little customization in software code. One of the points that respondents mentioned was that business process reengineering was the most difficult part of the job. Although best practices were chosen, many people used to do their jobs in traditional ways. Respondents said that they think the most important factor and the hardest job in ERP implementation is business process reengineering. Resistance against changes and using traditional ways of doing jobs created most problems in ERP implementation in TATA STEEL. TATA STEEL started its implementation according to ASAP methodology. They used it as their initial blueprint and scope and defined their plan, resources and budget according to it. During implementation TATA STEEL tried to maintain initial scope and avoid scope creep by aligning all phases to SAPs Asap. In implementation methodology, respondents say that although the selected method was big bang method but somehow they can call it phased approach, because the go-live date for different departments and modules was different but they main approach was big bang.

3.5.3
Factor 2: project team/management support/consultants
In TATA STEEL tried to select the best persons that were familiar with TATA STEEL business. Respondents believed that this team was the best that they could select according to company and Iran special situation. However they believe that if they could select a team that had more knowledge in their business and sap system they could achieve better results. Respondents said that team members should have following characteristics: Be experienced Have ability to accept changes Have business and technical knowledge All project team members should dedicate all their time to ERP implementation project. But some persons in team had various responsibilities that reduced their time that they can work on project and they were not able to dedicate their time to project. Respondents tell me that although compensations can motivate team members to do their responsibilities better and complete project phases in promised time, they didnt use compensation system at all because they fear from some problems because of this system. To do the jobs better, a special committee was created from different managers that CEO was on top of this committee. Although there were some disagreements between respondents, they said that there was a strong management support for the project. Management approved and supported implementation before and during implementation. Management committed with its own involvement and allocating valuable resources. Management had middle role in times of conflicts. Management of project was completely by TATA STEEL and TATA STEEL managed consultants too. 3.5.4
Factor 3: internal readiness/training
In order to make organization ready for changes, TATA STEEL has started an extended campaign that included trainings, advertisements and seminars. But respondents say that they think there is need to more efforts to ready people and organization to accept changes. They say that some people and departments have been doing their jobs traditionally and some have accepted changes very well and are doing their jobs according to new system. In order to involve users in implementation process and business process reengineering, from each target department that they wanted to do implementation, TATA STEEL selected

several persons and a leader among themselves and called them power users. These users selected from most knowledgeable and authoritative personnel. 3.5.5
Factor 4: deal with organizational diversity
TATA STEEL is a diverse organization that has employees in different departments and business units. Respondents believe that this diversity has an 49 important effect on their implementation. Doing business process reengineering in every department, managing changes, and training employees to use new system were the most difficult parts of implementation process according to respondents. Respondents say that they think diversity has a negative effect on implementation outcome. In TATA STEEL the single model for sharing information is used according to respondents. A large database with more than 18000 tables that shares all information in organization. Respondents say that they do not know if this model is better than federalist model or it was better if they used federalist model. They say that it was a challenge to determine what should be common throughout the organization and what should be allowed to vary, noticing that responsibilities of department and business units are so tight to each other. 3.5.6 Factor 5: planning/development/budgeting Opinions about planning were very different among respondents. Also ERP project manager say that there was a clear plan for implementing ERP but other respondents say that although there were same plans to clarify resources, costs, risks and timeline, there were no particular and documented plan to propose strategic and tangible benefits, and there was no clear business model and justification for the investment. According to respondents I understand that like any other projects there was a project plan with all specified costs and budget, timeline and specified resources, but not a specific plan for a complex project like ERP implementation. TATA STEEL decided to have an MIS and it seems that because of ERP buzz in that time they became interest in ERP implementation. There were some needs to develop interfaces, especially in financial department, to be able to communicate with commercial software applications and other suppliers and customers systems. These interfaces were developed in TATA STEEL and respondents said that they think this interfaces are working properly and not only have no negative effect on systems performance, but also are well developed and are so aligned to systems. 3.5.7 Factor 6: adequate testing ASAP methodology contains several templates to be used for documentation during the full implementation life cycle, such as sample test script or business process templates. The templates are crucial for an implementation team during an upgrade for sure. TATA STEEL has done everything according to Asap.

In TATA STEEL the test phase started by using ERP system in parallel with legacy systems to test and compare the output of two systems. Also integration test was performed in TATA STEEL to ensure that communication between different modules and systems is working properly.
Chapter 4
4.1 Findings
As said in introduction of this research ERP implementation can reap enormous benefits for successful companies - or it can be disastrous for organizations that fail to manage the implementation process. This research intends to answer the questions What are the critical success factors for ERP implementation? Key findings of this interpretive study were derived from interviewees perceptions, literature review and secondary data review conducted on unpublished documents from the research site. For doing this research two research cases were selected and interviews along with a secondary data review were conducted. Through a case study comparison of a successful ERP implementation with an unsuccessful implementation, It was found that 9 of 12 identified CSFs from literature were mentioned as critical and others as important with regards to the interviewees perceptions. The following factors are mentioned as critical: Worked with functionality Maintained scope Project team Management support Consultants Internal readiness Training Planning Adequate testing

Following factors are mentioned as important, but not critical, mainly because control of them is very hard. Deal with organizational diversity Development Budgeting
4.2
Recommendations
4.2.1 Implications for managers A crucial part of working with the ERP functionality is the ability to streamline operations. Doing business process reengineering and doing minimal customization in software code is very important. Broad reengineering should begin before choosing a system. In conjunction with configuration, a large amount of reengineering should take place iteratively to take advantage of improvements from the new system. Maintaining scope is just as important for small companies as it is for large organizations. The approach for rolling out their implementation is another very important consideration. The ERP team should consist of the best people in the organization. It is important that ERP be implemented by organizations themselves. Top management needs to publicly and explicitly identify the project as a top priority and managers should legitimize new goals and objectives. Consultants should have in-depth knowledge of software and company should be able to manage well these consultants The people element and training aspect of an ERP implementation is one the most important factors and companies should avoid to insist on assigning a fixed cost or percentage to the training effort. Change management is starting at the project phase and continuing throughout the entire life cycle. Enterprise wide culture and structure change which include people; organization and culture change should be managed. Planning a sophisticated ERP project should not be taken lightly or with little forethought. Planning should be closely identified with maintaining scope during an implementation.

Troubleshooting errors is critical. Both team members as well as executive management should not be tired after months or years of project. 4.2.2 Implications for future research Given the findings of this research and the analyses of case studies, future research directions could encompass: 1. What are the operational ERP factors and other possible barriers to ERP implementation? And what are their respective challenges to effective ERP implementation? 2. Do companies experience any significant and unexpected problems as a result of ERP implementation? If so, what are those problems? Could they be classified in one or more of the ERP strategic factors mentioned in this paper? 3. Does the use of ERP increase customer satisfaction beyond a companys products or a companys customer service? 4. How can organizations better train their employees to accept and use ERP systems? How could employee resistance to new ERP systems be overcome? 5. Are there any significant differences in ERP implementation results for older companies installing ERP systems as opposed to newer companies? 6. How can current ERP users customize their ERP systems to render them more productive and efficient? 7. What would ERP users like to see in new versions of ERP hardware/software?
4.3
Conclusion
My purpose was to research on two case studies at two different organizations and I decided to do the interviews with IT-managers or project managers who have been involved in the ERP implementation projects. My choice of respondents showed to be an excellent choice since the respondents I choose were well involved in the organizations and could answer all my questions. I conducted a mix of personal interviews, telephone interviews and reviewed some secondary data. Therefore I believe that my answers have been correctly interpreted. Although I think it was possible to do the research be one case study, but choice to research on two case studies was also a good choice. I did get a deeper understanding of the problems the organizations encountered by implementing ERP. It provided me with understanding of critical success factors that I wanted to investigate.

References & Bibliography

Argyris, C. (1991), 'Management information systems: the challenge to rationality and emotionality', Management Science, 291. Davenport, T. H. (1998), 'Putting the Enterprise Into the Enterprise System', Harvard Business Review, (76), 121-31. Davis, G. and Olson, M. (1985), Management Information Systems (New York: McGrawHill). Dong, L. (2001), 'Modeling top management influence on ES implementation', Business Process Management Journal, 7 (3), 243-50. Ehie, I. C., & Madsen, M. (2005). Identifying critical issues in enterprise resource planning (ERP) implementation. Computers in Industry, 56(6), 545-557. Gargeya, V. B. and Brady, C. (2005), 'Success and failure factors of adopting SAP in ERP system implementation', Business Process Management Journal, 11 (9). Harrison, J. L. (2004). Motivations for enterprise resource planning (ERP) system implementation in public versus private sector organizations. (Ed.D., University of Central Florida). ProQuest Dissertations and Theses, . (305080817). Helo, P., Anussornnitisarn, P., & Phusavat, K. (2008). Expectation and reality in ERP implementation: Consultant and solution provider perspective. Industrial Management & Data Systems, 108(8), 1045-1059. Holland, P., Light, B. and Gibson, N. (1999), 'A critical success factors model for enterprise resource planning implementation', Proceedings of the 7th European Conference on Information Systems (1), 273-97. Kahn, R. and Cannel, C. (1957), The Dynamics of Interviewing, ed. New York and Chichester (Wiley). Laudon, K. C. and Laudon, J. P. (2006), Management Information Systems: Managing the Digital Firm (9 edn.: Prentice Hall). Nah, F. F., Lau, J. L., & Kuang, J. (2001). Critical factors for successful implementation of enterprise systems. Business Process Management Journal, 7(3), 285-296.

Nash, K. S. (2000). Companies dont learn from previous IT snafus. Computerworld, 16(21), 3233. Parr, A., & Shanks, G. (2000). A taxonomy of ERP implementation approaches. System Sciences, 2000. Proceedings of the 33rd Annual Hawaii International Conference on, 10 pp. vol. 1. Miles, M. B. and Huberman, M. (1994), Qualitative data analysis: a source book of new methods (Thousand Oaks, California: Sage). Morris, T. and Wood, S. (1991), 'Testing the survey method: continuity and change in British industrial relations', Work Employment and Society, 5:2, 259-82. Stratman, J.K. and Roth, A.V. (2002), 'Enterprise resource planning (ERP) competence constructs: two-stage multi-item scale development and validation', Decision Sciences, 33 (4), 601-28. Sumner, M. (1999), 'Critical success factors in enterprise wide information management systems projects', Proceedings of the Americas Conference on Information Systems (AMCIS), 232-4. Swartz, D., & Orgill, K. (2001). Higher education ERP: Lessons learned. Educause Quarterly, 24(2), 20-27. Umble, Elisabeth J., Haft, Ronald R., Umble, M. Michael (2003), 'Enterprise resource planning: Implementation procedures and critical success factors', European Journal of Operational Research, 146, 241-57. Yin, R. K. (2003), Case study research - design and methods (Third edn.; Thousand Oaks, California: Sage Publication). Wallace , T.F., Kremzar M. H. (2001), Making it happen (John Wiley & Sons, Inc.). Themistocleous, M., Irani, Z. and O'Keefe, R.M. (2001), 'ERP and application integration', Business Process Management Journal, 7 (3), 195-204.

Appendix
i) Survey Questions
General information: Company information: Company: Location: Number of employees: Project start date: Project end date: Interviewee information: Name: Department: Title: Role in project: How long have you been with company? Implementation information: 1- What infrastructures company had before implementation? 2- How was computer and IT culture before implementation?
3- How ERP system vendor selected?
4- How is ERP system flexible for meeting future needs of company?
5- How scope defined before implementation? Did it change during implementation? - How was method of implementation selected? - How do you attribute scope and its maintenance during implementation to success of project?

6- How did you achieve worked with functionality: - Did you do BPR? - Did you change software code? - Did you and do you have vendor support?
7- How was project team selected? Was the team cross-functional? - How was the mixture of knowledge of team members? (Technical, Business or both) - How did team dedicate its time to project? - How team encouraged doing its job well?
8- How do you attribute management support to outcome of project? - Was a highly support from management to project? - How management involved in implementation? - Was a new organizational structure established and communicated? - Was management in middle in time of conflict?
9- How consultants selected and what was their role in project? - Did they have in-depth knowledge of software? - How did they involve in different stages of implementation? - Were you able to manage them?
10- How was company ready for changes? - Were users being involved in design and implementation of business processes? - How were trainings for IT staff?
11- How was employee training for post implementation? - How was investment for training? - Were users trained for new systems?

- How support ness meet after installation?
12- If your company is divers, how was information sharing model selected? - Did you do BPR in different unites?
13- Is there any development in software? - How were interfaces for legacy systems developed?
14- How was planning for project? -Were strategic and tangible benefits, resources, costs, risks and timeline outlined in plan? - Were a clear business model and justification for the investment defined?
15- How did budget dedicate to project? Was project finished within budget?
16- How were tests before go-live date? - Were done errors troubleshooting? - Was there and is there a plan for data cleaning and migration? ii) Analysis Sheet Table 1 : Worked with functionality/maintained scope
Deccan Paper Box Manufacturing Company (DPBM)
Worked with functionality Doing BPR and aligning the business processes with software Doing minimal customization to the software Considering vendor support and the number of previous implementations for choosing the package
Tata Steel( Tata)
+/+ +/+ -/+ Tata -/+ -/+
+/+ -/+ +/+

DPBM
Maintaining Scope
Maintaining the initial scope Choosing best way of implementation on individual basis
+/+ +/+
+/+ = Stated as a factor

-/+ = Not stated as a factor, but considered important -/- = Not stated as a factor Table 2: Project team/management support/consultants
Project team ERP team should be cross functional, mix of consultants and internal staff Team should have both business (familiar with business functions and products) and technical knowledge ERP team should be given compensation and incentives The team should be dedicated to ERP implementation Management Support Top management should set policies to establish new system Highly support and approval from top management is required during implementation Senior management must be committed with its own involvement and allocating valuable resources Consultants Consultants should have in-depth knowledge of software Should be involved in different stages of implementation Consultants should have multiple skills covering functional, technical, and interpersonal areas Table 3: Internal readiness/training
Tata Steel( Tata)
+/+ +/+ -/+ +/+ Tata -/+ +/+ +/+ Tata +/+ +/+ +/+
+/+ +/+ -/+/+

DPBM
+/+ +/+ +/+

DPBM
+/+ +/+ +/+
Internal Readiness Organization and people should be ready for changes Users should be involved in design and implementation of business processes Education should be a priority from the beginning of the project, and money and time should be spent on various forms of education and training
Tata Steel( Tata)
+/+ +/+
+/+ +/+
+/+
+/+

Training, re-skilling and professional development of the IT workforce is critical Training Heavy investment in training and re-skilling of developers in software design and methodology A support organization meets users needs after installation Employees must be trained on the new system in order to use it to continue day-to-day operations Table 4: Deal with organizational diversity
+/+ Tata +/+ +/+ +/+
-/+
DPBM
+/+ +/+ +/+
Deal with organizational diversity

Reengineering in both people and operational level in different business units Determining level of uniformity and choosing appropriate model
Tata Steel( Tata) +/+
Deccan Paper Box Manufacturing Company (DPBM) +/+
-/-
-/+
Table 5: Planning/development/budgeting
Planning A clear business plan and vision to steer the direction of the project Business plan should outlines proposed strategic and tangible benefits, resources, costs, risks and timeline A clear business model and justification for the investment based on a problem and the change tied directly to the direction of the company Development Interfaces for commercial software applications or legacy systems may need to be developed Budgeting Keep the project as much as possible within budget Table 6: Adequate testing
Tata Steel( Tata)
+/+ +/+
+/+ +/+
+/+ Tata -/+ Tata -/+
+/+
DPBM
-/+
DPBM
+/+

Adequate testing Vigorous and sophisticated software testing before go-live date is essential Troubleshooting errors is critical There should be a plan for migrating and cleaning up data
Tata Steel( Tata)
+/+ +/+ -/+
+/+ +/+ -/-

Prof S V Bharthi - Final Report

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Symbiosis Centre for Information Technology

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3.4.1 3.4.2 3.4.3 3.4.4 3.4.5 3.4.6 3.5

3.5.1 3.5.2 3.5.3 3.5.4 3.5.5 3.5.6 3.5.7

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4.2.1 4.2.2 4.3

Implications for managers ................................................................................................... 25 Implications for future research .......................................................................................... 26

ii) Analysis Sheet .................................................................................................................................... 31

Chapter 1: Introduction 1.1 Summary of Abstract

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Chapter 2: Review of literature

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Chapter 3: Analysis of Work Done

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3.2 Alternative Solutions and their advantages & disadvantages.

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3.3 Proposed Solution

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3.4 Technical Justification of the Solution

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3.5 Possible Applications in the Industry

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Factor 2: project team/management support/consultants

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References & Bibliography

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3- How ERP system vendor selected?

4- How is ERP system flexible for meeting future needs of company?

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- How support ness meet after installation?

Tata Steel( Tata)

+/+ +/+ -/+ Tata -/+ -/+

+/+ -/+ +/+

+/+ = Stated as a factor

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Tata Steel( Tata)

+/+ +/+ -/+/+

+/+ +/+ +/+

+/+ +/+ +/+

Tata Steel( Tata)

Deccan Paper Box Manufacturing Company (DPBM)

Symbiosis Centre for Information Technology

+/+ Tata +/+ +/+ +/+

+/+ +/+ +/+