Identifying Critical Success Factors (CSF) in ERP Implementation Using AHP: A Case Study of a Social Insurance Company in Indonesia

Identifying Critical Success Factors (CSF) in ERP Implementation Using AHP: A Case Study of a Social Insurance Company in Indonesia

R. Hendra Kusumawardhana, Imairi Eitiveni, Warda Yaziji, Zahrina Aulia Adriani
Copyright: © 2024 |Pages: 20
DOI: 10.4018/JCIT.337389
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Abstract

Enterprise resource planning (ERP) implementations often encounter multifaceted challenges, leading to failures. Success relies on technical competence, management support, and user engagement. Unique organizational processes significantly influence outcomes. Failures can disrupt operations, highlighting the need to identify critical success factors (CSFs) for effective ERP implementation. This study employed analytic hierarchy process (AHP) methodology to analyze CSFs. Data collection involved surveys administered to a social insurance company's ERP project team in Indonesia. This study revealed 15 success factors, categorized into organization, process, and technology dimensions. Organization emerged as the most crucial, followed by technology and process. Among these, five CSFs stood out: project team competence, vendor and consultant quality, ERP fit, top management support, and hardware and software selection.
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Introduction

Indonesia has several social insurance institutions established under the Act of National Social Security System (SJSN) (Kunarti et al., 2018). These institutions have business and operational processes that differ from typical insurance companies in terms of the scope of participants and stakeholders, the form of insurance products or programs managed, and the information systems (e.g., ERP) used. The variation in the range of participants is attributable to the regulations stipulating that social insurance in Indonesia is administered by a number of corporations and managing bodies. The participant scopes of these institutions vary, with certain ones catering to the military and police, civil servants, private employees, and civil servants (Bintang et al., 2019). The segmentation of participants in social insurance institutions, leading to the management of different insurance products or programs, sets them apart not only from each other but also from general insurance. These distinctions have a direct impact on the services and benefits provided to participants, encompassing service programs, premium variations, and benefit structures (Bintang et al., 2019; Kunarti et al., 2018). Consequently, social insurance institutions find themselves in the position of developing their own specialized enterprise resource planning (ERP) applications to effectively support their distinct operations and business needs. To achieve the optimal operational efficiency, organizations must gain a profound understanding of the critical success factors (CSFs) associated with ERP implementation. These domains and facets are considered to have an impact on the business continuity of an organization (Aini et al., 2020). Organizations that possess such an all-encompassing understanding of CSFs are able to precisely customize their ERP solutions to meet their needs while preserving superior quality and efficiency (Kausar & Budi, 2020; Hustad & Stenholt, 2022). Organizations have the potential to enhance data security, promote innovation, and mitigate long-term expenses by adopting this approach (Hustad & Stenholt, 2022). Therefore, it is crucial to understand CSFs in the context of ERP implementation in order to guarantee that substantial investments in ERP development result in long-lasting, favorable consequences while minimizing the implementation pitfalls that are inherent in the process. There has been a lack of research to date regarding the CSFs associated with the implementation of ERP in social insurance institutions. It has been acknowledged that the distinctive attributes of social insurance operations may exhibit substantial variations in comparison to those of other sectors. The insurance program in question incorporates distinctive attributes, such as the demographics of participants' backgrounds and ages, in addition to the participation of particular stakeholders – government institutions operating at the central and regional levels. Due to their inability to use pre-built ERP systems like SAP, Oracle, and others, social insurance companies are compelled to independently develop their own ERP application systems (Pakpahan et al., 2021). Therefore, since the ERP system under development differs from conventional ERP systems, adopting CSFs from other industries or extant studies may not adequately address the unique challenges and requirements of the social insurance domain. Thus, it is crucial to emphasize the significance of undertaking research that is precisely designed to shed light on these variables within the social insurance industry, thereby guaranteeing a successful and efficient execution in this distinctive setting. The research question in this study is as follows:

What are the critical success factors (CSFs) influencing the ERP implementation in social insurance companies in Indonesia?

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