Enterprise Resource Planning Essay

There are twenty KSFs considered in this study. They were chosen from literature review. The KSFs are classified into five stages of ERP implementation life cycle; namely: project preparation, technology selection, project formulation, implementation/development and deployment. To address the study objectives, a survey questionnaire was considered the most appropriate research method. It was sent to 74 companies that have been implementing ERP system for at least one year. The respondents are staff at management level, IT staff and users involved in the development and use of the ERP system. The survey received 248 responses from 740 quesitionnaires that were sent to the companies. To find the priority of KSFs on ERP implementation life cycle, a quantitative analysis is applied to identify the weighting of KSFs toward ERP implementation success. The success of ERP implementation can be measured through five indicators; namely: system quality, information quality, service quality, tactical impact and strategical impact. Based on the weighting of KSFs on each stage of ERP implementation life cycle, it is found that the communication is most critical KSF on project preparation stage (? 0. 664). While the strong ERP product (package selection) is most critical KSF on technology selection stage (? = 0. 554). The change management is most critical KSF on project formulation stage (? = 0. 406), and on implementation/development stage, user training is the most critical KSF (? = 0. 422). This study is expected to improve knowledge in ERP implementation, especially the role of KS F on each stage of ERP implementation life cycle. Keywords: Priority of KSFs, ERP Implementation Success, ERP Implementation Life Cycle, Key Success Factors (KSFs) _____________________________________________________________________________________________________________ Introduction Enterprise Resource Planning (ERP) system is an integrated information system that is used to support business processes and resource management within an organization. These systems integrate between one business unit with other business units. With the implementation of this system in an organization to support the company’s operations, it is expected to provide optimum benefit for the company. This is especially needed by the various industrial sectors in this era of lobalization. So, the company can compete with competitors or even create a competitive advantage. In addition, ERP selection is also done with various strategic reasons both tangible and intangible. ERP software has grown rapid ly the last 10 years. According to AMR Research, ERP system sales increased dramatically in 2004 reached 23. 6 billion dollars. Market Journal of Enterprise Resource Planning Studies 2 growth rate remained stable in 2005, and the end of 2009 the ERP software sales reached 24. 5 billion dollars (Hestermann, Anderson ; Pang, 2009). One of the largest ERP companies is SAP AG (a German Company). The company controls about 40% of the market and it is the third largest software company in the world. Based on data from SAP AG, about 80% of SAP’s sales occur in Europe and the United States, while the remaining 20% spread in Asia. The main reason of the investment made by companies is due to the ERP system integration business and it promises to improve the company’s competitive position in the market (Luo and Strong, 2004). Some benefits have also been frequently cited in several studies related to the ERP system, such as: data and pplication integration as a substitute for legacy systems, lower cost and faster deployment compared with in-house development, adopting ERP best practices into business company processes (Markus, 2004). However, some other cases show that investments of Information Technology (IT) with substantial funds may not necessarily bring optimal benefits. This is shown by Dantes & Hasibuan (2010) who i llustrate that nearly 60% of ERP implementation in Indonesia in both public and private companies have failed. Even big companies in the world such as: FoxMeyer Drug and Dell Computer have pent quite a lot of funds for implementation of ERP but the benefits obtained are not optimal (Kalakota and Robinson, 2001). It was reported that FoxMeyer like all large companies engaged in pharmaceutical declare themselves bankrupt because of failure in implementing the system. In line with the above data, a survey conducted by Robbins-Giowa in American companies in 2001 found that about 51% of companies in America have failed in the implementation of ERP (IT Cortex, 2003), In China, it is estimated that the ERP implementation success rate is only 10% (Zhang et al. , 2003). Success and failure of ERP system implementation is influenced by several aspects of both internal and external organizations. Various factors are influencing the success of ERP implementation. Many researchers found critical success factors on ERP implementation, but they were not put in practice. Therefore, in this study we examine the KSF and propose a priority of KSFs on ERP implementation life cycle, both technical and non technical issues that influence the ERP implementation success. Theoretical Background The following sub sections discuss ERP implementation life cycle, KSFs on ERP mplementation process, and measurement of ERP implementation success model. Implementation Life Cycle ERP implementation is changing from legacy systems into ERP system. It is more on process change instead of technology change itself. This section will describe the stages on ERP implementation from previous research, in which each model has different stages. In general, ERP implementation process has three main stages: pre-implementation, implementation and post-implementation (Capaldo and Rippa, 2009). However, some researchers considered each stage to be sub-stages according to their perspectives.