The consistency among facilitating factors and ERP implementation success: A holistic view of fit
Introduction
Many researchers and practitioners agree that enterprise resource planning (ERP) systems are the most important development in terms of corporate use of information technology (IT) in the 1990s (Davenport, 1998). The latest generation of ERP commercial software packages often integrate information from finance, accounting, human resources, operations, supply chains, and customers. Nevertheless, implementing ERP in a corporation is a costly and complex under-taking (Markus et al., 2000, Griffith et al., 1999). A modest budget for ERP implementation in a small to mid-sized company can range from US $2 million to $4 million. The cost of a full-blown implementation in a large organization may easily exceed $100 million. While some organizations have achieved significant efficiencies through the use of ERP, others have encountered disappointing outcomes (O’Leary, 2000, Jenson and Johnson, 1999, Bradford and Florin, 2003). In fact, about 90% of ERP implementations turn into runaway projects (Martin, 1998). To avoid such costly failures, much effort has been expended to identify the key factors necessary for successful ERP implementation (Bingi et al., 1999, Motwani et al., 2002, Umble and Umble, 2002, Zhang et al., 2005, Hong and Kim, 2002, Holland and Light, 1999, Somers and Nelson, 2001, Umble et al., 2003). The most often identified critical success factors (CSFs) include: top management support, vender support, consultant competence, user support, IT capability, and project manager leadership.
Researchers have also observed that the ERP implementation process is a complex social interaction between IT (departments) and organizations (Griffith et al., 1999, Markus and Robey, 1988). Success often requires a process of mutual adaptation between the IT and organizational environments (Volkoff, 1999, Markus et al., 2000). This adaptation process indicates that ERP implementation requires a “fit” among all of the contingent variables in organizational settings, such as culture, business processes, user backgrounds, and IT capabilities. Further, the “contingent fit” implies that each of the identified CSFs may be more or less critical in different organizational situations. Based on the implicit assumption that fit is required among contingent variables, vast amounts of empirical research have been devoted to examining which CSFs are most critical in various settings (Allen et al., 2002, Sheu et al., 2004). For example, Allen et al. (2002) argued that in the public sector, top management support for ERP implementation proved to be the most critical factor. However, the implicit fit assumption for contingent variables has never been challenged. Given that ERP is such a complex social–technical system, we question the necessity of contingent variable fit in terms of successful ERP implementation. ERP literature up to this point has not provided any guidelines regarding this critical question. Therefore, in this paper we challenge the implicit conventional wisdom of “contingent fit” as it exists in the literature.
While numerous studies have attempted to identify the critical factors affecting ERP implementation success, none have investigated the alignment among ERP CSFs because past research often assumed each of the facilitating factors to have a direct and independent causal influence on final ERP implementation outcomes (Genoulaz et al., 2005). However, recent strategic alignment (or fit) studies in other disciplines have proposed a different view of “fit” (Chan et al., 1997). They argue that strategic alignment represents a broad and holistic perspective of strategy. This “holistic fit” view suggests that ERP implementation must achieve a certain level of “consistency” among those critical implementation success factors. In other words, the critical success factors are not “independent” of each other as previously thought – organizations must allocate their resources into each of those critical factors in a requisite match.
This study, based upon the environment-strategy alignment theory, examines the following two questions: (1) whether ERP CSFs are aligned consistently in ERP implementation; and (2) whether organizations enhance their ERP implementation success by aligning ERP CSFs. The selected ERP CSFs examined in this study include: vendor support, consultant competence, ERP project team member competence, ERP project manager leadership, top management support, and user support. The results from a field survey of 90 manufacturing firms in Taiwan showed vendor support, top management support, and user support had higher levels of consistency than did the others, and that ERP implementation success significantly depends on the consistency levels of the examined CSFs. The results of this study have several important implications for IS management teams and researchers. IS managers should be made aware that ERP implementation cannot only focus on a small, selected number of CSFs, but rather on achieving “consistency” among a large set of CSFs. Also, IS managers can gain a greater sense of understanding regarding the high failure rate of ERP implementation – there must be “consistency” among the ERP implementation CSFs in order to attain success. For IS researchers, the proposed holistic view of fit opens a new avenue of research issues. For example, it suggests that future studies, instead of examining the impacts of individual CSFs on ERP implementation process/outcomes, may examine the “consistency” among the CSFs. This result also provides an alternative explanation about the inconsistent empirical results found on the impacts of particular CSFs (e.g. user support).
Section snippets
Background and research model
ERP systems are often viewed as the most strategic computing platform for organizations (Sweat, 1998); however, over 70% of ERP implementations have been judged as unsuccessful (Griffith et al., 1999). ERP implementation success studies typically deal with issues such as ERP project implementation problems, critical success factors, and risk management (Esteves and Pastor, 2001). As a consequence, a great deal of effort has been expended in an attempt to identify the key factors responsible for
Sampling
A cross-sectional mail survey was used for data collection. The original survey questionnaire was developed based on measures identified in the literature, and described as follows. First, three IT managers reviewed the questionnaire to ensure face and content validity. A pre-test was then conducted to validate the instrument. Ten IT managers who had previous involvement with ERP implementation projects were asked to examine the survey instrument. They were asked to not only suggest additions,
Measurement model
Structured equation modeling (SEM) analysis using the EQS program was employed to estimate both measurement and structural models for quality and fit. The quest for measurement quality in this study includes construct reliability, convergent validity, and discriminant validity. Construct reliability is an issue of measurement within a construct. The verification here is that the items on the instrument for a given construct do indeed consistently measure the variable in the model. Convergent
Conclusions and limitations
Based on the logic of fit as covariation suggested by Venkatraman (1989), the internal alignment among factors including vendor support, consultant competence, ERP project team member competence, ERP project manager leadership, top management support, and user support was conceptualized and operationalized as a construct of consistency. The empirical results show that consistency in ERP can have a significantly positive effect on ERP implementation success, as well as provide support to our
Acknowledgement
This research was in part supported by the National Science Council of ROC, Taiwan, under contract number NSC096-2811-H-008-001 and NSC96-2752-H-008-003-PAE.
Eric T.G. Wang is Information Management Chair Professor of the School of Management at National Central University, Taiwan (R.O.C.). He received his PhD in Business Administration, specializing in Computer and Information Systems, from the William E. Simon Graduate School of Business Administration, University of Rochester. His research interests include electronic commerce, supply chain management, outsourcing, organizational economics, and organizational impact of information technology. His
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Cited by (0)
Eric T.G. Wang is Information Management Chair Professor of the School of Management at National Central University, Taiwan (R.O.C.). He received his PhD in Business Administration, specializing in Computer and Information Systems, from the William E. Simon Graduate School of Business Administration, University of Rochester. His research interests include electronic commerce, supply chain management, outsourcing, organizational economics, and organizational impact of information technology. His research has appeared in Information Systems Research, Management Science, Journal of Management Information Systems, Decision Sciences, Decision Support Systems, Information & Management, European Journal of Information Systems, Information Systems Journal, Omega, European Journal of Operational Research, International Journal of Information Management, International Journal of Project Management, and others.
Sheng-Pao Shih is a PhD candidate in the Department of Information Management, National Central University, Taiwan (R.O.C.). His research interests include project management, ERP implementation, and information system professional issues. His research has appeared in Information and Software Technology.
James J. Jiang is a Professor of Management Information Systems at the University of Central Florida. He is also the honorary Jin-Ding Professor at the National Central University in Taiwan. He was a Visiting Research Professor in Tshing-Hwa University, National Taiwan University, and City University of Hong Kong. He obtained his M.S. in Applied Mathematics, Computer Sciences, and Management Sciences. His PhD in Information Systems was granted by the University of Cincinnati. His research interests include IS project management, IS human resources management, and IS service quality management. He has published over 100 academic articles in these areas in journals such as Journal of Management Information Systems, Decision Sciences, Communications of the ACM, IEEE Transactions on Systems, Man, and Cybernetics, IEEE Transactions on Engineering Management, IEEE Transactions on Professional Communication, Journal of the AIS, and MIS Quarterly. He teaches programming, project management, and software engineering courses.
Gary Klein is the Couger Professor of Information Systems at the University of Colorado in Colorado Springs. He obtained his PhD in Management Science from Purdue University. Before that time, he served with the company now known as Accenture in Kansas City and was director of the Information Systems Department for a regional financial institution. His research interests include project management, technology transfer, and mathematical modeling, with over 100 academic publications in these areas. He teaches programming, project management, statistics, management science, and knowledge management courses. In addition to being an active participant in international conferences, he has made professional presentations on Decision Support Systems in the United States and Japan, where he once served as a Guest Professor to Kwansei Gakuin University. He is an active member of the Institute of Electrical and Electronic Engineers, Association for Computing Machinery, Decision Science Institute, INFORMS, American Society for the Advancement of Project Management, and Project Management Institute.