Critical Success Factors of ERP Implementations in Belgian SME’s:A Multiple Case Study

Claude Doom and Koen MilisHOGESCHOOL-UNIVERSITEIT BRUSSEL

ERP success

• Critical Success Factors (CSF)• Most research: large implementations

• Focus on smaller ERP implementations in SMEs• Focus on Belgian market

– Many SMEs– Case study of 4 successful implementations

• Preliminary results

Critical Success Factors for ERP

• CSF: improves chances of successful project implementation

• Five groups:1. Vision, scope, and goals2. Culture, communication, and support3. Infrastructure4. Approach5. Project management

Vision, Scope, and Goals

Enterprise vision, ERP project scope, Implementation goals

•Vision, Strategy and Business plan– Clear and motivating business vision– Clear project mission (related to business)– Clear definition of strategic goals– Clear business plan, describing benefits– Model of target business

•Scope– Clear definition of ERP project scope– Limitation of scope to essential business functions

Culture, Communication, and Support

• Senior management support– Project approval– Identifying project as top priority– Senior management participation– Defending and supporting project– Mediation in conflicts– Understanding of technology and issues– Proper resource assignment– Communication of shared vision– Communication of role of new system to staff– Identify and approve new organizational structures, roles

and responsibilities– Approve codes of conduct

Culture, Communication, and Support

• User involvement• Effective change management

– Strong corporate identity– Open to change– Encouraging open communication– Determination to accept new technologies– Determination to overcome implementation problems– Project champion

• Internal communication– Announcement of project scope, objectives before onset– Formal presentations / user participation (requirements,

results)

• Supplier management

Infrastructure

• Standardized IT infrastructure• Suitable business and IT legacy systems

Approach

Overall approach to project

• Formalized project approach and methodology– “Skeleton approach”: limited start expansion– “Single module”: module per module– “Big Bang”: complete system

• Focus on user requirements• Use of external consultants• User training• Data accuracy (at conversion, at input)

• Alignment with business processes

Project Management

• Proper project planning, phasing and follow-up– Project goals description

(realistic quality, time and cost goals)– Project scope

• Identification business processes• Choice of modules• Identification of changes

– Project phasing and critical path analysis– Milestones and deadlines– Resources plan– Project follow-up organization– Contingency measures

Project Management

• Properly organized project management• Appropriate project teams

– A single physical location– Incentives for delivery within time and budget– Incentives and risk-sharing agreements with partners

Critical Success Factors in Belgian SMEs

Do these CSFs apply to Belgian SMEs?

• 76 SMEs with known successful ERP implementations– #employees: 10 250– Revenue < 50 mio euro– Balance total < 43 mio euro

• Limited survey• 4 Representative cases

– Different sectors– Structured interview of key players (IT, Management)

Company Activity Employees Revenue in 2006(mio euro)

F-Co Latex-foam 113 34.1

M-Co Process engineering 57 14.5

O-Co Vegetable oils 87 84.0

W-Co Tires and Wheels 51 40.5

F-Co

• Leading European manufacturer of latex foam• Sites in Belgium, Czech republic• Sales offices in 10 more countries

• SAP implementation– Purchasing, order entry, materials management, production

planning, financial accounting, distribution and logistics, asset management, data warehouse

– Single site– Project divided into subprojects– 10% modified– “Big Bang” roll-out

F-Co: Project

Component Fraction of cost

Hardware 10%

Software 60%

Consulting 5%

Implementation team 5%

Training 20%

• Duration: 6 months planned, 7-12 months effective• Cost: 1 – 1.5 mio euro as planned• Useful lifetime: 10 years

F-Co: CSFs

• Users heavily involved– Information and participation– Requirements identification– Training– No formal acceptance

• Pivotal role of senior management– Project approval– Financial responsibility– Top priority

• Change management– Organization open to change– Commitment to new technology– Determination to overcome operational problems

F-Co: CSFs

• Change management– Project champion

• Middle management• Defending project

• Project approach and management– Mixed team with external consultants– Project manager selection criteria: competences and

experience– Team members

• Top performing staff• Mostly part-time involvement

– Critical decisions: company management (close collaboration)

– Incentive for delivery within time and budget

Project participants Fraction of staff

Users 50%

Business analysts 15%

Technical experts 10%

External consultants 25%

M-Co

• Branch of world-wide provider of products and technologies for separation, heat transfer, fluid handling

• Intentia ERP suite– Purchasing, order entry, materials management, financial

accounting, distribution and logistics, financial management

– Interface to data warehouse and reporting tools– Division into subprojects– 20% modifications

M-Co: Project

• Duration: 7-12 months, slightly longer than planned• Cost: 1 – 1.5 mio euro as planned• Useful lifetime: 10 years

Component Fraction of cost

Hardware 30%

Software 35%

Consulting 10%

Implementation team 10%

Training 15%

M-Co: CSFs

• User involvement (outside project team!)– Informed– Not actively involved– Only management participated actively

• Requirements, advice and feedback

– Positive acceptance of final result– Extensive training

• Crucial role of Management participation– Approval– Responsibility– Identification as top priority

M-Co: CSFs

• Change management– Corporate culture: flexibility,

shared values, common goals– Open communication– Project champion

• Middle management• Effective contribution unclear

• Project approach and management– Project manager selection criteria: capabilities, flexibility,

reputation– Team members

• Mostly part-time

– Consultation with management for critical decisions– No incentives

Project participants

Fraction of staff

Users 40%

Business analysts 20%

Technical experts 20%

External consultants

20%

O-Co

• European division of global player in development and production of vegetable oils

• SAP implementation– Purchasing, order entry, materials management, production

planning, financial accounting, distribution and logistics, financial management, data warehouse, advanced planning

– 30% modifications

O-Co: Project

• Duration: 7-12 months as planned• Cost: 1 – 1.5 mio euro as planned• Useful lifetime: 5 years

Component Fraction of cost

Hardware 10%

Software 10%

Consulting 50%

Implementation team 20%

Training 10%

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O-Co: CSFs

• Particular attention to user involvement– Timely information– Requirements, remarks, feedback– Actively seek user approval

• Active involvement top management– Approval– Identification as top priority– Conflict resolution– Active participation– Not final responsibility

(final responsibility carried by member of operational management)

O-Co: CSFs

• Change management– Corporate culture of open communication– Openness to change– Commitment to new technology– Strong will to overcome operational problems– Change agents and Project champion (middle management)

• Emphasizing advantages• Defense against critics• Conflict resolution• Contacts with users• Detecting problems with system

O-Co: CSFs

• Project management– Project team

• Best staff members• 50% end users

– Project manager selection criteria: capabilities, experience, reputation, flexibility

– All critical decisions taken by corporate management– No incentives

Project participants Fraction of staff

Users 50%

Business analysts 10%

Technical experts 0%

External consultants 40%

W-Co

• Provider of industrial and agricultural tires and complete wheels

• Belgium: 3 sites

• Intentia ERP– Purchasing, order entry, materials management, production

planning, financial accounting, distribution and logistics, financial management

– Interface with data warehouse– 5% modifications– Loose planning– Split into subprojects

W-Co: Project

• Duration: 7-12 months as planned• Cost: 1 – 1.5 mio euro as planned

Component Fraction of cost

Hardware 5%

Software 15%

Consulting 50%

Implementation team 10%

Training 20%

W-Co: CSFs

• Major user participation– Information whole community

• Representation by a few users

– Soliciting user input– Requirements, feedback– No formal approval– Training: “job helpers”

• Top management instrumental– Approval– Alignment with corporate strategy– Identification as top priority– Conflict mediation– Necessary changes in corporate culture– Assumed final responsibility

W-Co: CSFs

• Change management– Project champion

• Project management– Project team

• Best staff members• Mostly part-time

– Project manager selection criteria: reputation, flexibility– Urgent decisions taken by project team

• Proper communication with top management

Project participants Fraction of staff

Users 10%

Business analysts 50%

Technical experts 20%

External consultants 20%

Critical Success Factors in Belgian SMEs

• Vision, Scope, and Goals– Vision, strategic goals, and business plan– Scope– Efficient management reporting

• Culture, Communication, and Support– Senior management support– User involvement– Effective change management– Internal communication– Supplier management

• Explicit scope limitation important

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• Suitable corporate culture,

open to change

Critical Success Factors in Belgian SMEs

• Infrastructure– A standardized IT infrastructure– Suitable business and legacy systems

• Approach– A formalized project approach and methodology– Focus on user requirements– Use of external consultants– User training– Data accuracy– Alignment with business processes

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Critical Success Factors in Belgian SMEs

• Project Management– Proper project planning– Proper project management– Good project teams

• Variable project management• No critical path• No contingency

• Project champion• Contribution not always clear

• Project manager criteria: capabilities, experience• Mix of internal and external specialists

Conclusions

• Important Critical Success Factors of ERP implementations in Belgian SMEs:– A clear vision on the strategic goals of the implementation– Senior management support– Active user involvement– A suitable corporate culture, open to change– Internal communication on the project (before, during)– Proper supplier management– Formalized project approach and methodology– Focus on user requirements– Use of external consultants– User training: technical, business, practice oriented– Proper project planning, phasing and follow-up– A mixed project team: users, internal technical and business

experts, external consultants

Thank you