Critical Success Factors of ERP Implementation

IntroductIon An enterprise resource planning (ERP) system is an integrated set of programs that provides support for core organizational activities, such as manufacturing and logistics, finance and accounting , sales and marketing, and human resources. An ERP system helps the different parts of an organization share data and knowledge, reduce costs, and improve management of business processes. In spite of their benefits, many ERP systems fail (Stratman & Roth, 1999). Implementing an ERP system is a major undertaking. About 90% of ERP implementations are late or over budget (Martin, 1998), and the success rate of ERP systems implementation is only about 33% (Zhang et al., 2003). Over the past few years, limited research has been conducted about ERP implementation issues: mainly, case studies in individual organizations have been reported. A major problem with such ERP case studies is that very few implementation failures have been recorded in the literature, and thus, the reasons why implementations fail are not known to practitioners and researchers. That is a motivation toward conducting empirical studies to explore critical factors that affect ERP systems implementation. A recent summary of ERP literature stated that research of critical success factors (CSFs) in ERP implementation is rare and fragmented (Nah, Lau, & Kuang, 2001). The idea of identifying CSFs as a basis for determining the information needs of managers was popularized by Rockart (1979). CSFs are those factors that are critical to the success of any organization, in the sense that, if objectives associated with the factors are not achieved, the organization will fail—perhaps catastrophically (Rockart, 1979). In the context of ERP project implementation, CSFs represent the essential ingredients, without which a project stands little chance of success. This study examines the CSFs for implementing ERP systems in Venezuela. Managers from seven corporations, who were identified as having key roles in ERP systems implementation, were surveyed in order to assess empirically which CSFs are critical in 759 Critical Success Factors of ERP Implementation leading a successful implementation of ERP systems in Venezuela. This article is organized into four sections. First, ERP-related literature is reviewed. The next section introduces the research methodology, followed by presentation of the results. The article ends with the conclusions and implications for future research and practice.