strategic planning for successful erp...

Proceedings of 7th Annual American Business Research Conference

23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5

Strategic Planning for Successful ERP Implementation

Abdelmageed Elsadek Abdelrazek

Since early 1990s, many firms around the world have shifted their information technology (IT) strategy from developing information systems in-house to purchasing application software such as enterprise resource planning (ERP) systems. IT managers responsible for managing their organization’s ERP implementation view their ERP systems as their organizations’ most strategic computing platform. This is because ERP implementations are usually large, complex projects, involving large groups of people and other resources, working together under considerable time pressure and facing many unforeseen developments. In order for an organization to compete in this rapidly expanding and integrated marketplace, ERP systems must be employed to ensure access to an efficient, effective, and highly reliable information infrastructure. Despite the benefits that can be achieved from a successful ERP system implementation, there is evidence of high failure in ERP implementation projects. Identifying project success and failure factors and their consequences as early as possible can provide valuable clues to help project managers improve their chances of success. This research concentrates on the most frequently mentioned ERP implementation success factors that have been discussed on the literature. Also, It introduces a detailed adoption concerns showing surveys that declare the most stated motives and challenges that should be considered when an organization planning for ERP adoption. to better manage the risks associated with ERP adoption, enterprises should follow the mentioned methodology to gain a clear idea of the impact and effects it may face on their IT services and organizational culture and structure.

1. Introduction Sensible use of technology can give organizations a competitive advantage. This may be especially true for enterprise resource planning systems that are capable of transforming organizational processes through integration and automation, stated by Markus, and Tanis (2000). ERP systems often provide firms a positive return, Hayes, Hunton, and Reck (2001), but that is not always the case. ERP systems are costly and have often resulted in inconsistent economic returns. According to Ivo De Loo (2011), One reason ERP may fail to meet expectations is poor implementation. A second reason is that an ERP system is a poor fit for a particular firm and perhaps should not have been adopted, publication of Hong, and Kim (2002). Motivated by this second reason, coupled with the frequent failures of ERP systems, the author explores the ERP adoption decision process. This idea could suggest that the effects of institutional pressures on ERP adoption decisions are moderated by the level of ambiguity surrounding the costs versus benefits of adopting an ERP system. Enterprise resource planning (ERP) systems, when successfully implemented, links all functions of an organization including order management, manufacturing, human resources, financial systems, and distribution with external suppliers and customers into a tight integrated system with shared data and visibility, stated by Chen (2001). The primary motive

for ERP implementation is the potential for enhancing the firm's competitiveness. ERP systems

provide significant benefits, and companies adopted them with the goal of replacing inefficient stand-

alone legacy systems, increasing communications between business functions, increasing

information processing efficiencies, improving customer relations, and improving overall decision

making, Cereola (2011). However, Risks are part and package of ERP project., Nonetheless a

_____________________________________________________________________ Assoc. Prof. Abdelmageed Elsadek Abdelrazek, MIS dept., Email: [email protected], College of Business

Administration (CBA), University of Business and Technology (UBT), Jeddah, Saudi Arabia


23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5 planned and systematically adopted risk management procedure throughout the implementation

project reduces the possibility of risks. The risks are higher for SMEs as the cost overruns during

implementation may put financial strain on the firm and thus largely impact firm performance Cereola

(2011). In addition, SMEs have less of a chance of recovering from a failed ERP implementation

attempt than large enterprises.

Enterprise resource planning systems constitute the basic information systems software in the

modern environment as well as the typical model of computing in an organization. These systems

offer a way to efficiently plan and manage the resources of an entire company through the integration

of its information and information-based processes across functional area as well as beyond the

organizational boundaries, Buonanno et al., (2005) and Laukkanen et al., (2007). The benefits of

adopting an ERP include for example; cost reduction, better customer service, improved productivity,

better quality, enhanced resource management, better planning and decision making and

organization empowerment. The organizations which have successfully implemented the ERP

systems are winning the benefits of having integrating working environment, standardized process

and operational benefits to the organization.

This research concentrates on the most frequently mentioned ERP implementation success factors

that have been discussed on the literature. Also, It introduces a detailed adoption concerns showing

surveys that declare the most stated motives and challenges that should be considered when an

organization planning for ERP adoption. to better manage the risks associated with ERP adoption,

enterprises should follow the mentioned methodology to gain a clear idea of the impact and effects it

may face on their IT services and organizational culture and structure.

Thus, the paper is organized in sections as follows: The second section cover ERP evolution and growth. Section three and four cover the most stated motives and challenges of ERP adoption process. In section five, an implementation methodology consists of six stages is introduced to ensure risk free implementation activities. Section six lists the most mentioned critical success factors to follow for the implementation process. Some notes is stated about the adoption in developing countries is mentioned in section seven and ending with the conclusion.

2. ERP Evolution and Growth In 1960s Enterprise Resource Planning (ERP) has been developed for inventory management

systems and then evolved to Materials Requirements Planning (MRP) in the 1970s and

Manufacturing Resource Planning (MRPII) in the 1980s. In 1990s, Gartner Group, a famous US

based consultancy firm, re-christened MRPII as ERP, publication of Nah et al., (2001). The initial

meaning of ERP indicated integrated software applications that govern different departmental

functions such as finance and human resource. Today, the term ERP implies widespread integrated

information systems applicable to any organization regardless of size and geographic locations, as of

Huang et al., (2003).

The first generation ERP system (introduced by vendors such as SAP and Baan) was used by large

manufacturing companies such as Boeing, Mercedes-Benz and BMW, Van Everdingen, and Van

Hillegersberg (2000), Kumar and Hillegersberg (2000). Over time, various other industries such as

retail, wholesale and service also began using ERP system. In recent years, ERP II – a second

generation system with additional features such as supply chain management and customer


23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5 relationship management was introduced in the market. The improved ERP system integrates back

and front end office operations seamlessly, Beath (2000). The primary backbone of ERP system is

information technology (IT) which helps in the integration of numerous applications and processes

owned by different departments in a firm. It is not just about enabling efficient communication

between networks and protocols but is also about integration of different business processes,

company policies and organizational structures.

Since mid 1990s, the number of ERP using firms has been growing significantly. Verma (2007)

reported that ERP system has become a part and parcel of firms with over $1 billion annual turnover

in the year 1998. Six years later, Markus et al. (2000) highlighted that nearly 70% of Fortune 1000

firms are users of ERP system. Apart from penetration quantum, reports are also abundant with

success stories from ERP vendors‘ perspective, although most of them seem to be estimation figure

per se.

The massive investment and growth figures depict business organizations preference for ERP

system. Such importance is further exacerbated by claims made by leading ERP vendors such as

SAP AG and Oracle, on the benefits provided by their ERP architecture to business performance. For

example, Oracle claimed that their E-business Suite assist customers to make effective informed

decisions by improving their business operations and reducing operation expenditures while SAP AG

promises ‗faster return on investment‘ via their SAP ERP solution.

The growth in ERP users across the globe implies successful adoption to the system. The literature

however has showed evidence of ERP system adoption failures, regardless of whether in developed

or developing countries. In lieu of the failure cases, empirical and non-empirical studies have shown

various critical success factors that can assist in avoiding adoption failure.

3. ERP Adoption Motives An enterprise‘s motivation to adopt ERP systems can surfaced up due to a number of reasons. As

indicated by Shang and Seddon (2000), they linked ERP adoption with the gained benefits out of the

implementation. They classified ERP benefits into five groups as follows: Operational group, relating

to cost reduction, cycle time reduction, productivity improvement, quality improvement, and customer

services improvement. Managerial group, relating to better resource management, improved

decision making and planning, and performance improvement. Strategic group, concerning

supporting business growth, supporting business alliance, building business innovations, building cost

leadership, generating product differentiation, and building external linkages. IT infrastructure group,

involving building business flexibility, IT cost reduction, and increased IT infrastructure capability.

Organizational group, relating to supporting organizational changes, facilitating business learning,

empowering, and building common visions.

While Oliver, Whymark, and Romm's stated that the prime motive to adopt ERP systems is to increase organizational performance by process improvement or business process reengineering (BPR) as well as seeking standardization or increasing flexibility. Another motive is to have better decision making in the enterprise by having increased transparency, better information-flow and reliable data. In addition, many organizations want to adopt ERP systems to modernize and rationalize their IT infrastructure and to get rid of legacy systems in order to simplify the maintenance. The integration is another prime motive for ERP adoption. It includes the integration of data for better decision making and integration of the systems with the purpose of having a common platform.


23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5 Furthermore, there is a range of business-oriented rationales for ERP adoption such as increased customer satisfaction, shorter cycle times, currency conversion/globalization, reduce costs and competitive rationale. By looking at Figure 1, that shows the result of surveys that have done in 2014 for manufacturing organizations, it could be realized that the most highest reasons for ERP implementation are: to better integrate systems across multiple locations (22.3%), to standardize global business operations (21.9%), to replace old ERP or legacy system (17.9%), and to make employee jobs better (11.2%). The Aberdeen Group found the following quantifiable benefits from best-in-class ERP implementations: 22% reduction in operating costs,20% reduction in administrative costs, and 17% inventory reductions (for manufacturing and distributing),19% improvements in complete and on-time delivery,17% improvements in schedule compliance (for manufacturing and distributing).

Figure 1. Reasons for ERP Implementation



Figure 2. ERP Benefits

Also, as indicated from Figure 2 the most stated benefits on the mentioned survey are: information availability 33.3%, increased interaction across the enterprise 23.1%, and customer interaction 12.8%.

4. ERP Adoption Challenges Many changes that come about due to an ERP implementation will substantially affect employees. Success depends on how effectively you understand and manage the impacts of these changes. Many challenges could surfaced up during the implementation process that should be cleared and managed to assure the success of the implementation. Next we stated some of these challenges that must be addressed by the project management:

First, it is very important that the implementation is done in stages. "Planning is absolutely necessary

if you want your ERP project to succeed, you simply can‘t wing ERP, stated by Erik Kaas. If you don‘t

do proper planning it will lead to confusion and chaos down the road because the organization might

not fully understand their current processes and how to evolve them to maximize business benefits

and efficiencies. To do a proper planning, organizations should conduct an internal audit of all of their processes and

policies before choosing an ERP system. In addition, putting together an ERP evaluation team

composed of stakeholders from across the business. Moreover, if you feel you do not have the in-

house capability to properly evaluate ERP systems, consider hiring an experienced third-party,

vendor-neutral consultant, who has experience implementing ERP solutions at companies in your

industry. Second, proper training is very essential during and after implementation. The staff should

be comfortable in using the application or else, it will backfire, with redundant work and functional

inefficiencies. A lack of proper training is one of the most common reasons that ERP projects fail, and

it can also result in employees resenting the new system because they don't understand it. Without

knowing features, companies miss opportunities to automate business processes, complete functions

faster, and meet business objectives. In addition, upgrades, enhancements, and maintenance are

more



Figure 3. Six phases ERP Implementation Methodology

Strategic Enterprise Architecture - Implementation Motives - Critical Evaluation of Internal / External Aspects



Define

Outline Implementation Strategy

Define Project Objective

Establish Project Team & Define Project Scope

Business Requirement Definition

Conceptual Design & Infrastructure Analysis

Define Test Strategy & Quality Process

Plan

Define Business Process

Prepare Detail Design

Establish Technical Infrastructure

Finalize GAP Analysis & Project Scope

Project Team Familiarization & Training

Finalize Test Plans & Quality Process Results

Build

Module Build & Baseline Configuration

Configuration Training

System & End User Documentation

Develop RICEF Objects

Establish System Security & End User Privileges

Quality Review & Corrective Actions

Deploy

Integration & System Testing

Load & Stress Testing

End User Training

User Acceptance Testing

Cut-over Plan & Production Migration Plan


Operate

Cut-over Operation

Production Migration

System Readiness Audit & Go Live

Establish Change Control Process

Validate Production Entries


Support & Optimize

Post Production Support Process

New System Adoption & Learning

System Monitoring & Fine Turning

End User Handholding

Recommend

Business Process Optimization

Validate Project Scorecard

Pro

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Best P

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costly, and less likely to succeed. All of that is because there isn‘t proper training. The organization

have to make sure employees have a chance to become comfortable with the new system before it

goes live will do wonders for your chances at ERP success. In addition, the organization should

create a master list with all the features, tracking usage, and periodically reviewing the list to

determine which features are being used and which are the most helpful. Third, lack of proper

analysis of requirements. It will lead to non-availability of certain essential functionalities. This might

affect the operations in the long run and reduce productivity and profitability. Fourth, lack of support

from Senior Management will lead to unnecessary frustrations in work place. Also, it will cause delay

in operations and ineffective decisions. Hence, it is essential to ensure that the Senior Management

supports the transformation.

Fifth, compatibility Issues with ERP Modules leads to issues in integration of modules. Companies

associate different vendors to implement different ERP modules, based on their competency. It is

very essential that there is a way to handle compatibility issues. Also, the organization should

decommission legacy applications. Sixth, cost overheads will result, if requirements are not properly

discussed and decided during the planning phase. Therefore, as we discussed in the planning phase

a detailed plan with a complete breakdown of requirements should be worked out before execution. In

addition, the organization should have a maintenance strategy. Because if they don‘t have it then they

are not taking full advantage of their ERP investment and their maintenance dollar. By not applying

maintenance, their systems will quickly become obsolete (from a technical perspective) as will their

business processes. Moreover, it is very important to the keep the kernel up-to-date with the right

legal changes applied to prevent potential problems. Finally, investment in infrastructure is very

essential. ERP applications modules will require good processing speed and adequate storage. Not

allocating suitable budget for infrastructure will result in reduced application speed and other software

issues.

Also another study performed by Kamhawi (2008) in Bahrain, where he made a list of 18 possible challenges. The top ten out of eighteen barriers of ERP adoption are as follows. (1) Large capital investments required for ERP systems; (2) Requires too much training for employees; (3) Other important priorities for now; (4) No need now for the drastic change that ERP systems require; (5) We lack the experience needed to develop and support ERP systems; (6) It would be difficult to integrate ERP system with our existing systems; (7) Too risky projects; (8) Lack of project management experiences; (9) Difficult for our organization to learn how to operate this new system; (10) Lack of resources. 5. ERP Implementation Methodology Today‘s fast changing global scenario demands faster flow of information. Due to increasing business complexity and market demands, enterprises need to adopt newer technologies and latest enterprise packages. Before beginning any ERP project, it‘s critical to ensure that the entire organization understands the reasons and strategy behind the move. If decision makers do not clearly support the need for change, your budget and resource planning may be negatively affected. If project members and end users


23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5 don‘t understand the objectives, confusion can prevail over purpose and commitment, increasing resistance to change and reducing the chance of success.

In this paper, an implementation methodology that is consists of six stages is introduced. These stages ensure the successful implementation of the ERP system.

Figure 3 presents a methodology for ERP implementation that consists of six-phases each of which representing a distinct milestone in the ERP adoption. It is crucial that management conduct a review at the end of each stage to make sure everyone agrees on its outcome before moving on to the next stage. These phases are preceded by a critical look at a company‘s strategic enterprise architecture and surrounded by project management & best practice and steering committee reviews. The strategic enterprise architecture analyzes the driving motive for implementing an ERP system while project management and steering committee seek to integrate the human resource dimension and coordinate daily operations with the new business process design taking into account the processes best practice, respectively. The first phase is the define phase in which project scope and objectives are determined, implementation and test strategies are defined, project team and infrastructure analysis are established. In second phase, plan, system specification is prepared and finalized. In this phase, the detailed process design and technical infrastructure are set, GAP analysis is defined, and business processes and test plan are defined by F. C. Weston (2001). The third phase, build, is concerned with establishing system security, configuration training, developing reports, interfaces, conversion, and forms. Fourth phase, deploy, concentrating on all types of system testing under full data load and extreme situations, educational training is undertaken to understand how data flow through the system and how the system is operated at each point in the supply chain, and production migration plan. In the fifth phase, operate, conversion strategy is followed to replace the old scattered systems with the new integrated ERP system to go live. The final phase is named as support and optimize phase during which the post implementation support plan is established, system monitoring and fine tuning activities are achieved, and business processes are optimized. 6. Critical Success Factors For ERP Implementation After reviewing so many successful ERP implementations in the literature, it has been shown that leadership and top management commitment are the most critical factors in organizations embarking on ERP implementation. In this case, a smooth change management and system rollout is ensured. This commitment will encourage setting the right mission and objectives as well as increase the creativity of the employees. For an enterprise to gain future competitive strategy it needs to implement the ERP system successfully. To do so and also get the most benefits out of ERP adoption, it should pay a great attention to the most cited success factors. Implementing an ERP system is not an inexpensive or risk-free venture. In fact, 65% of executives believe that ERP systems have at least a moderate chance of hurting their businesses because of the potential for implementation problems . It is therefore worthwhile to examine the factors that, to a great extent, determine whether the implementation will be successful. Numerous authors have identified a variety of factors that can be considered to be critical to the success of an ERP implementation. The most prominent of these are described below: 6.1 Commitment by top management


23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5 Top management commitment and support is very important in ensuring that ERP projects come to success, as they set up the strategic directions of the implementation process as well as supporting and monitoring the implementation process. This support might include providing strategic direction by being actively involved in various high-level cross-functional implementation teams. Implementation of an ERP system entails transforming the company to a higher level of performance, and transform it into a more efficient and effective organization through a streamlined business process. Identification of these critical factors permits managers to obtain a better understanding of issues surrounding ERP implementation. 6.2 Business process reengineering Another important factor that is critical for the success of ERP implementation is the Business Process Reengineering. It is defined by Yakovlev (2002) as the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed. Organizations should be willing to change their businesses to fit the ERP software in order to minimize the customization activities, Zhang et al., (2003); Shehab et al., (2004); McAdam and Galloway (2005). This fact requires examination of many business processes, which believed to be one of the important and beneficial results of the implementation of ERP system. It should be noted that there is no single ERP solution that can prove to be a panacea and fulfill all the business requirements. Integrating differing software packages from various vendors always poses a challenge to the organization and requires a good business process engineering. 6.3 Minimal customization It should be noted that ERP systems are theoretically based on industry best practices, and their makers intend that organizations deploy them as is, as stated by Kraemmerand, P.; et al. (2003) and Vipola, Inka Heidi (2008). In spite of the fact that ERP vendors do offer customers configuration options that let organizations incorporate their own business rules, according to Thomas H. Davenport (2002) - for example it can select the type of inventory accounting (FIFO or LIFO) to use; whether to recognize revenue by geographical unit, product line, or distribution channel; and whether to pay for shipping costs on customer returns, there still often feature gaps remain even after configuration is complete.

ERP customers have several options to reconcile feature gaps, each with their own pros/cons. Technical solutions include rewriting part of the delivered software, writing a homegrown module to work within the ERP system, or interfacing to an external system. These three options constitute varying degrees of system customization—with the first being the most invasive and costly to maintain, stated by Fryling, Meg (2010). Alternatively, there are non-technical options such as changing business practices or organizational policies to better match the delivered ERP feature set.

6.4 Excellent project management Successful ERP implementation requires that the organization engage in excellent project management. This includes a clear definition of objectives, development of both a work plan and a resource plan, and careful tracking of project progress. The project plan should establish aggressive, but achievable, schedules that instill and maintain a sense of urgency. A clear definition of project objectives and a clear plan will help the organization avoid the all-too-common ‗‗scope creep‘‘ which can strain the ERP budget, jeopardize project progress, and complicate the implementation. The project scope must be clearly defined at the outset of the project and should identify the modules selected for implementation as well as the affected business processes. If management decides to implement a standardized ERP package without major modifications, this will minimize the need to

http://en.wikipedia.org/wiki/FIFO_and_LIFO_accounting


23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5 customize the basic ERP code. This, in turn, will reduce project complexity and help keep the implementation on schedule. 6.5 Organizational change management The existing organizational structure and processes found in most companies are not compatible with the structure, tools, and types of information provided by ERP systems. Even the most flexible ERP system imposes its own logic on a company's strategy, organization, and culture. Thus, implementing an ERP system may force the reengineering of key business processes and/or developing new business processes to support the organizations goals. And redesigned processes require corresponding realignment in organizational control to sustain the effectiveness of the reengineering efforts. This realignment typically impacts most functional areas and many social systems within the organization. The resulting changes may significantly affect organizational structures, policies, processes, and employees. Unfortunately, many chief executives view ERP as simply a software system and the implementation of ERP as primarily a technological challenge. They do not understand that ERP may fundamentally change the way in which the organization operates. This is one of the problematic issues facing current ERP systems. The ultimate goal should be to improve the business––not to implement software. The implementation should be business driven and directed by business requirements and not the IT department. Clearly, ERP implementations may trigger profound changes in corporate culture. If people are not properly prepared for the imminent changes, then denial, resistance, and chaos will be predictable consequences of the changes created by the implementation. However, if proper change management techniques are utilized, the company should be prepared to embrace the opportunities provided by the new ERP system––and ERP will make available more information and make attainable more improvements than at first seemed possible. The organization must be flexible enough to take full advantage of these opportunities. 6.6 Clear strategic goals and expected benefits ERP implementations require that key people throughout the organization create a clear, compelling vision of how the company should operate in order to satisfy customers, empower employees, and facilitate suppliers for the next three to five years. There must also be clear definitions of goal, expectations, and deliverables. Finally, the organization must carefully define why the ERP system is being implemented and what critical business needs the system will address. 6.7 A great implementation team ERP implementation teams should be composed of top-notch people who are chosen for their skills, past accomplishments, reputation, and flexibility. These people should be entrusted with critical decision making responsibility. Management should constantly communicate with the team, but should also enable empowered, rapid decision making. The implementation team is important because it is responsible for creating the initial, detailed project plan or overall schedule for the entire project, assigning responsibilities for various activities and determining due dates. The team also makes sure that all necessary resources will be available as needed. 6.8 Extensive education and training Education/training is probably the most widely recognized critical success factor, because user understanding and buy-in is essential. ERP implementation requires a critical mass of knowledge to enable people to solve problems within the framework of the system. If the employees do not understand how a system works, they will invent their own processes using those parts of the system they are able to manipulate.


23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5 The full benefits of ERP cannot be realized until end users are using the new system properly. To make end user training successful, the training should start early, preferably well before the implementation begins. Executives often dramatically underestimate the level of education and training necessary to implement an ERP system as well as the associated costs. Top management must be fully committed to spend adequate money on education and end user training and incorporate it as part of the ERP budget. It has been suggested that reserving 10–15% of the total ERP implementation budget for training will give an organization an 80% chance of implementation success. All too often, employees are expected to be able to effectively use the new system based only on education and training. Yet, much of the learning process comes from hands-on use under normal operating conditions. Thus, (a designated individual preferably the project leader) should maintain ongoing contact with all system users and monitor the use of, and problems with, the new system. There is also a need for post-implementation training. Periodic meetings of system users can help identify problems with the system and encourage the exchange of information gained through experience and increasing familiarity with the system. 6.9 Effective Communication This Factor describes exactly which piece of information needs to be communicated and what vehicles, channels or methods project team members will use to carry out the necessary project implementation, as of Yu, C.S (2005). According to McAdam and Galloway (2005), ERP implementation is a long term endeavor, involves inevitable interaction between top management, project group and vendors. That is why the communication factor is one of the most challenging and difficult element in any ERP project. A communication plan has to be established to detail several areas including the rationale for the ERP implementation, details of the business process management change, demonstration of applicable software modules, briefings of change management strategies and tactics and establishment of contact points. Communication has to cover the scope, objectives, and tasks of an ERP implementation project. In a way to avoid the various communication failures, an open information policy has to be maintained for the project. For example, a good e-mailer system can help promote this policy, but serious problems need to be discussed by telephone or, preferably, face to face. 6.10 Technological infrastructure According to Somers, and Nelson (2004, 2001), It is clear that ERP implementation involves a complex transition from legacy information systems and business processes to an integrated IT infra-structure and common business process throughout the organization. Hardware selection is driven by the firm's choice of an ERP software package. The ERP software vendor generally certifies which hardware and hardware configurations must be used to run the ERP system. This factor has been considered critical by the practitioners and as well as by the researchers. 6.11 Data migration Many companies tend to focus on software testing and configuration and put off dealing with data migration until late in the implementation process. An attribute of successful ERP implementations is that data migration is put into the project plan as early as possible. A company‘s data is one of its primary assets and issues with migrating data between legacy systems and a new ERP system can have a sizeable negative impact on business operations, especially those that are exposed late in the process. Once the scope of the data to be migrated is determined, activities such as data scrubbing and mapping can be performed independent of the larger implementation process. Similarly, work on


23 - 24 July 2015, Sheraton LaGuardia East Hotel, New York, USA, ISBN: 978-1-922069-79-5 forms and reports can be conducted without relying on the rest of the implementation. It‘s also a good idea to incorporate a data component into conference room pilots and testing processes, so that data is tested within the software along with business processes.

Another important decision is how much historical data should be brought into the new system. Many companies have a policy of saving everything rather than make decisions about what data should be saved and what should be put in long-term storage. Some companies are required to retain data for compliance with the Sarbanes-Oxley Act; others are concerned about threat of e-discovery and consequent legal penalties. Nonetheless, all companies should establish a data retention and storage strategy.

6.12 Data accuracy Another important factor that is closely tied to data migration is data accuracy. Data accuracy is absolutely required for an ERP system to function properly. Because of the integrated nature of ERP, if someone enters the wrong data, the mistake can have a negative domino effect throughout the entire enterprise. Therefore, educating users on the importance of data accuracy and correct data entry procedures should be a top priority in an ERP implementation. ERP systems also require that everyone in the organization must work within the system, not around it. 7. ERP Adoption in Developing Countries Implementing an ERP system often constitutes a company‘s largest IS investment and in many cases the largest corporate project, Summer (2000). This is more so in SMEs of developing countries where many of the operational, control and managerial systems have yet to be automated and where legacy systems are not as entrenched as in the businesses in the developed countries. It is then for this reason that many researchers have concluded by stating that, in developing countries, ERP systems are often implemented not to replace legacy systems but as part of an organization‘s effort to modernize and differentiate itself, Reimers (2003). ERP system adoption has been rather predominant in developed countries for many years. The past few years however saw penetration of ERP system in firms in developing countries. There are a growing number of literatures on ERP usage in developing countries lately. Some studies examined the cultural differences between countries as the major driver for successful ERP adoption. Literature on the ERP implementation comparison between developed and developing countries indicates that developing countries are more focused towards building an integrated knowledge management framework to ensure a sustainable and more culturally accepted information system, according to Nah and Degaldo (2006). The same author has also indicated that the firms from the developed countries are more focused towards project management issues and business process management. In their study, Huang and Palvia (2001) reviewed ERP implementation differences in developed and developing countries and concluded that economic status, government regulations, low IT maturity, firm size and lack of business process management experience as the major hindrance for firms in developing countries to reap the benefits from ERP investment. Karimi (2008) has indicated that the firms in Bahrain were more concerned about sustaining the ERP implementation through continuous training and exposure from the external consultants and vendors to their employees. This will ensure their local expertise are equipped with the knowledge and ultimately lowering the cost of maintaining the ERP system. 8. Conclusion The implementation of ERP systems in organizations is an enormously complex undertaking. The implementation process surely will affect nearly every and each aspect of the organizational


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