Critical organizational and implementation factors for ERP success

Abstract

Today, companies are radically changing their information technology strategy by purchasing application software packages instead of developing information systems in-house. In the recent information technology (IT) industry survey of IT managers responsible for managing or administering their organization’s ERP package, two-thirds of the survey respondents viewed their Enterprise Resource Planning (ERP) systems as their organizations’ most strategic computing platform. However, despite its strategic importance, it was reported that three quarters of ERP system installations were judged to be unsuccessful by the ERP implementing companies. So what is the problem with ERP system implementation? Some authors argued that the root of such a high failure rate was the different interests between user organizations who desire a unique business solution and ERP vendors who prefer a generic solution applicable to a broad market. Such conflicting interests underline an importance issue: ‘the organizational fit of ERP system’. Based on relevant literature, we clarify the concept of the organizational fit of ERP system and examine its impact on different aspects of ERP success, together with relevant organizational and implementation variables. We proposed a theoretical framework based on fit theory in information systems (IS) and IS implementation theory. The research model and hypotheses were developed, and tested through a pilot and main surveys. The pilot survey included thirty-two responses from ERP project teams and thirty-seven responses from ERP end users in six ERP implemented firms, ranging from small and medium companies to large companies in Korea. We examined the reliability and validity of the questionnaire instruments. Some measurement items were refined and the research model in this thesis is revised through this pilot survey. Next we conducted the main study by mail survey, which covered fifty organizations that implemented ERP systems in Korea. All thi...