A Study on Critical Success Factors for Successful ERP Implementation at Indian SMEs

Title

A Study on Critical Success Factors for Successful ERP Implementation at Indian SMEs

Creator

MEHTA ARPITA

Description

ERP (Enterprise Resource Planning ) comprises of a commercial software package that promises the seamless integration of all the information flowing through the company??financial, accounting, human resources, supply chain and customer information (Davenport, 1998). Much has been written on implementation of Enterprise Resource Planning (ERP) in organizations of various sizes. The literature is replete with many cases studies of both successful and unsuccessful ERP implementations. Research on the implementation of ERP in certain European countries shows that, the job of implementing an ERP is a riskier business for Small and medium-size enterprises (SMEs) than for Large Enterprises (LEs), still SMEs have been receiving lesser focus from the software vendors and consultants than LEs (Shanks et al.,2000). There have been very few empirical studies that attempt to delineate the critical success and failure factors that drive the success and failure of ERP implementation at Indian SMEs. Much of the time, ERP software vendors and consultants are the targets for blame when anticipated results do not materialize. Are the ERP vendors and consultants that sold the software the real culprits for the lack of business performance improvement? (Rao, 2000).The failure rates of ERP implementations have been publicized widely but, this has not distracted companies from investing large sums of money on ERP implementation. Many companies in developing countries have implemented ERP to capture its benefits still there is a lack of examining Critical Factors (CFs) that contribute in the success and failure of ERP implementation at Indian SMEs(Ranganathan and Kannabiran, 2004). In this dissertation, a framework has been adopted to cover both the national (Indian) and the organization size (SMEs) aspects to identify and rank the CFs that contribute in the success and failure of ERP implementation at Indian SMEs. Four models (ERP model, ERP Implementation Success Model, ERP Implementation Failure Model and ERP Gap (Strategic ERP) Model) were developed to explore and rank the thirty Critical Success Factors (CSFs) along with the twenty Critical Failure Factors (CFFs) that contribute in the success and failure of ERP implementation at Indian SMEs. Key Critical Success Factors (KCSFs) and Key Critical Failure Factors (KCFFs) were identified by ranking of these CSFs and CFFs according to their importance to decide their priorities during the ERP implementation at Indian SMEs. Quantitative survey based method was used to explore what are the possible critical success and failure factors that contribute in the success and failure of ERP implementation at India SMEs .Three close ended questionnaire were used to collect the data from the 500 Indian ERP consultants those who are having experience of ERP implementation in India for almost all types of Indian industries including Indian SMEs. Sample was drawn from ten national and international well known IT (ERP) sector companies which are involve in world wide ERP implementation including Indian SMEs. The Indian ERP consultants have been selected for the data collection using non probabilistic sampling method. The data collected were analyzed using statistical techniques such as descriptive statistics, reliability tests, validity tests, exploratory factor analysis and non parametric tests. In order to explore thirty CSFs and twenty CFFs along with the KCSFs and KCFFs, three close ended questionnaires were customized with the help of literature reviews and experts opinions. Later on it has been standardized for this research with the help of Cronbachs Alpha readability and validity test (Guilfords formula) supported by exploratory factor analysis. Based on the Indian ERP consultants perceptions, literature review, and secondary data review it was found that an ERP implementation at Indian SMEs is not exactly same from the ERP implementations found in the existing literature for the worldwide Large Enterprises (LEs). When discussing the CSFs and CFFs for an ERP implementation at Indian SMEs, it was found that although the factors are more or less same but the importance of factors in term of their priorities (importance) are defiantly different from the ERP implementation of the LEs.

Source

Management

Date

2010