Critical Success Factors In Enterprise Resource Planning (ERP) Implementations

Critical success factors (CSF) that have been identified in the literature also are part of the Agile landscape, yet the literature does not call out any Agile methodology as an approach to promoting ERP success. Agile approaches may be well suited for ERP implementation, by leveraging the power of self-organizing teams, effective backlog management, the…

Critical success factors (CSF) that have been identified in the literature also are part of the Agile landscape, yet the literature does not call out any Agile methodology as an approach to promoting ERP success. Agile approaches may be well suited for ERP implementation, by leveraging the power of self-organizing teams, effective backlog management, the discipline of delivering functionality in rapid “sprint” cycles, effective metrics and feedback mechanisms.

ERP system implementation is generally an expensive, complex, and risky process for organizations. The software replaces the departmental information technology (IT) systems and process silos in an organization with a single enterprise application that integrates data into a single database and standardizes processes to allow for information sharing and automated communication with relying on a “sneakernet” data mobility paradigm . Because an ERP system changes everything about a business and breaks down the information and process stovepipes, the systems tend to be both complex in their configuration and disruptive to the people that will use the system. As a result, the opportunities for setbacks in the implementation process, or even outright failure, have been shown to be extremely high.

There are clear consistencies in the CSFs that lead to successful ERP implementation, which are characterized by fulfillment of the objectives in correct and complete form, at minimum cost, time, and human resources, and produce the expected and planned benefits for the enterprise so it can develop the competitive advantages envisioned by management. Some of these CSFs include:

• Top management support
• Business process-reengineering
• Project management
• Project champion
• End users involvement
• Training and support for users
• Having external consultants
• Change management plan
• ERP system selection
• Vision statement and adequate business plan
• Facilitation of changes in the organizational structure in the “legacy systems” and in the IT infrastructure
• Open communications
• Teamwork composition for the ERP project
• Tests and problem solutions

Autocratic, reactive, “big bang” approach was most fraught with risk and likely to fail where more bureaucraticized, incremental ERP implementation was lower risk and more likely to succeed. I propose ERP implementation framework that encourages preplanning and strategic direction with full management support and preparation of the staff (pre-implementation and training), excellent project management, communication, best-fit ERP selection, and performance metrics (implementation), and finally , auditing, benchmarking, and documenting the process against the actual performance (post-implementation).

I recommend an Agile approach to ERP projects, where a backlog of features are implemented in time-boxed sprints, with incremental functionality delivered on a steady schedule, such as every thirty days. Their preference for incrementalism could also support a Spiral approach to an ERP project. Both Agile and spiral depend not only on incrementalism, but also a prioritization of working deliverables to end users. These deliverables do not have to be software; they can also include such items as new process maps (BPR), training, and change management programs, all of which are discussed as significant CSFs and principles of preparedness.

Self-organization of teams, or emerence, an important feature of Agile methods, can work well with CSFs. A characteristic of this approach is the teams become adaptive systems, so they are able to rapidly solve problems as they arise with limited input from a project manager. In fact, I posit this approach would increase the opportunity for the CSF to buy-in from the organization, as it invests everyone that is affected by the ERP and resultant process overhaul in the effort and its ultimate success. They also provide an opportunity for teams to manage and mitigate risk through preparedness strategies.
Conclusions

Given the complexity of ERP implementation, success is not a guaranteed outcome. An intensive amount of research into this area has found a combination of CSFs and preparedness strategies that can improve the odds of project success with budget and schedule, with the desired process, cost, and competitive improvements realized for the organization. The evidence shows that an incremental approach to an ERP implementation is the most likely to succeed, which provides the best opportunity for implementing both the CSFs and the preparedness strategies. The incrementalism can be implemented using either a spiral development approach, or an Agile approach, the latter of which also leverages a self-organization model. The model is most likely to engage more people from the organization in the implementation process, increasing everyone's personal stake in the effort's success.