Empirical Assessment of Factors Influencing Success of Enterprise Resource Planning Implementations

Empirical Assessment of Factors Influencing Success of Enterprise Resource Planning Implementations

Fiona Fui-Hoon Nah (Missouri University of Science and Technology, USA), Zahidul Islam (Independent University, Bangladesh) and Mathew Tan (Agilent Technologies, Malaysia)
Copyright: © 2009 |Pages: 24
DOI: 10.4018/978-1-60566-090-5.ch018
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Abstract

Enterprise resource planning (ERP) implementations in multinational manufacturing companies have experienced various degrees of success. This article investigates factors influencing the success of ERP implementations in multinational manufacturing companies in the Malaysian Free Trade Zone. The results indicate that enterprisewide communication and a project management program are key factors influencing the success of ERP implementations, while other factors such as top management support as well as teamwork and composition are not as critical to the outcome. Organizational culture is a moderator of the relationships between enterprise-wide communication, a project management program, and the success of ERP implementations.
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Literature Review

ERP is a solution to fragmentation of information in large business organizations (Davenport, 1998). An ERP system typically comprises a central, state-of-the-art, comprehensive database that collects, stores, and disseminates data across all business functions and activities in an enterprise. By integrating all business functions, economies of scale are obtained and the business gains a significant operating cost reduction, in addition to improved capabilities and information transparency. The increased business trends of globalization, mergers, and acquisitions demand that companies must have the ability to control and coordinate increasingly remote operating units. An ERP system can help to achieve this by enabling the sharing of real-time information across departments, currencies, languages, and national borders.

The dream of creating an enterprise-wide system began in the 1970’s, but was then unrealized due to the technological barriers at that time. Instead, most companies created what McKenney and McFarlan (1982) termed “islands of automation”, which naturally evolved as new IT applications were introduced to fill the constantly-emerging business needs. This gave rise to a plethora of different systems that were loosely interfaced. As a result, information was scattered throughout an organization, and detailed analyses of an organization’s performance across its business functions were not possible. Such information was impossible to obtain unless manual record-sifting or specialized programming requirements were carried out. In time, the organizational costs to maintain these “legacy” systems began to exceed the funds available for building new systems (Lientz & Swanson, 1980).

Enterprise systems provide a backbone of information, communication, and control for a company (Buckhout, Frey, & Nemec, 1999), and embody the current best business practices for organizational processes (Esteves & Pastor, 2000). Numerous benefits include improvements in:

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