1.4 RESEARCH METHODOLOGY:
DATA COLLECTION:
Data for this research was collected using close ended questionnaires from about 500 Indian ERP consultants. It was a structured questionnaire which comprised of sequenced questions. An E-mail based questionnaire was used to collect the primary data. This questionaire was sent to the various Indian ERP consultants to get the opinion and to test the exploratory statements (exploratory hypotheses).
Research Design
Table 2:Research Design RESEARCH TYPE / EXPLORATORY RESEARCH
RESEARCH CONTEXT / SMALL AND MEDIUM SIZED ENTERPRISES AND ERP CONSULTANTS WITHIN INDIA
RESEARCH APPROACH / QUANTITATIVE SURVEY BASED ON LIKERT SCALE
SAMPLING / 500 ERP CONSULTANTS , NON PROBABILITY SAMPLING
DATA TYPE / NOMINAL AND ORDINAL SCALE(CATEGORICAL VARIABLE)
VARIABLES OF STUDY / THIRTY CRITICAL SUCCESS FACTORS
DATA COLLECTION TOOLS / THREE CUSTOMISED SURVEY INSTRUMENTS
DATA ANALYSIS TOOLS / DESCRIPTIVE STATISTICS, RELIABILITY TEST, VALIDITY TEST, EXPLORATORY FACTOR ANALYSIS, NON PARAMETRIC TEST
DATA ANALYSIS SOFTWARE / SPSS, MS-EXCEL
DATA ANALYSIS TOOLS
TABLE 3: DATA ANALYSIS TOOLSDATA ANALYSIS TOOLS / SPSS ,MS-Excel
Questionaire One
(Identification of CSF for successful ERP implementation at Indian SMEs on LIKERT five point scale / Descriptive Statistics
(Arithmetic Mean and Standard Deviation)
Reliability Test(Cronbach’s Alpha)
Validity Test
Exploratory Factor Analysis
Questionaire Two
(Ranking of CSF on 1 to 30 point scale for successful ERP implementation at Indian SMEs) / Descriptive Statistics
(Arithmetic Mean and Standard Deviation)
One sample K-S test
Non parametric Tests
(Friedman’s test, Kendall’s W test)
1.5 Research Design:
Step 1—Examining validity and reliability of the items within each questionnaire
Step 2— Calculating descriptive statistics along with exploratory statements (exploratory hypotheses) testing and exploratory factor analysis
Step 3—Testing for nonparametric tests
The first step was examining validity and reliability between items within each variable so that it can
Identify which variables should be modified. Survey instruments used in research are generally
considered reliable if they produce similar results regardless of administrator and forms. Cronbach’s
alpha is the most widely used as a measure of reliability. It indicates the extent to which a set of test
items can be treated as measuring a single variable. Cronbach’s alpha generally increases when the
correlations between the items increase. For this reason, items in each variable that are highly
correlated should have a higher internal consistency of the test . The lower acceptable
limit of 0.50– 0.60 was suggested by Kaplan and Saccuzzo; however, as a rule of thumb, a reliability
of 0.70 or higher is required before an instrument used.
The second step was data analysis with the help of pilot survey .Exploratory factor analysis attempts
To identify underlying variables, or factors, that explain the pattern of correlations within a set of
observed variables. It is most frequently used to identify a small number of factors representing
relationships among sets of interrelated variables. For this reason, factor analysis is considered a
statistical data reduction technique that takes a large number of observable instances to measure an
unobservable construct .It generally requires four basic steps:1 calculate a correlation matrix of all
variables; 2 extract factors;3 rotate factors to create a more understandable factor structure; and 4
interpret results For new factors, have to look at variables extracted from factor analyses by
examining correlation coefficients and reliability indicators(Kothari,1991). Data analysis including
descriptive statistics, correlation, reliability test, factor analysis and non parametric tests was
conducted to adjust survey items and extract factors associated with the success of ERP
implementation at Indian SMEs.. The survey that was developed to search for a possible relationship between CFs and ERP implementation was analyzed by using a statistical software package called SPSS V 18. Some of the contacts for this survey were gathered from consulting firms and some of them were found by searching on the web for companies that have implemented ERP system and are already using the package. Statistical test was performed to decide whether this survey was reliable or not. The reliability analysis procedure calculates a number of commonly used measures of scale reliability and also provides information about the relationships between individual items in the scale. There are many models of reliability but the Alpha (Cronbach’s) model was used in this study. This is a model of internal consistency, based on the average inter-item correlation and this fits into this research data properties. Following the reliability analysis, a normality test was applied on the survey data and then according to the results of this analysis parametric and non parametric test were used to test the exploratory statements
(exploratory hypothesis). Because survey data was not normal in case of questionnaire two, non
parametric test was used to search for relationships between the variables.
Reliability: Reliability was one of the most critical elements in assessing the quality of the construct measures and it was a necessary condition for scale validity. A statistically reliable scale provides consistent and stable measures of a construct. Composite reliability estimates were used to assess the inter-item reliability of the measures. Estimates greater than .70 were considered to meet the criteria for reliability. In general some items may be removed from the construct scales if their removal results in increases in the reliability estimate, however, care must be taken to ensure that the content validity of the measures is not threatened by the removal of a key conceptual element (Kothari,
1991). After analysis it was found that reliability of each survey instrument was above .70
Validity: It was established by selecting the item which had significant alpha on instrument in total reliability. Favorable results from Guilford’s formula along with the exploratory factor analysis had also supported the strong construct validity of the instrument.
Content validity-The choice of an item depend in the first instance upon the judgment ofcompetent person as to its suitability for the purpose of the research. This constructs the content validity. The content validity is non-statistical type of validity its strength depends on the rigorous theoretical exercise employed in its application (Kothari, 1991), therefore the tools were content validated by experts in the specialized field.
Cross Validity-The scales was said to possess cross validity since the sample selected for tryout was not included in the establishment of final reliability and validity of the scale. This avoids the chance error of increasing the reliability coefficient.
Item validity-This was established by selecting the item which had significant alpha value on instrument total reliability.
TABLE 3 :RANKING OF CRITICAL SUCCESS FACTORS FACTORS / Mean / Std. DeviationF1 Top Management Commitment & Support / 4.48 / 2.2296
F2 Change Management Process / 4.97 / 2.7814
F3 BPR & Software Configuration / 6.86 / 2.7474
F4 Project Champion / 4.68 / 2.8760
F5 Business Plan, Vision / 4.34 / 2.6342
F6 Effective Communication Plan / 5.54 / 3.5089
F7 Post Implementation Evolution / 6.10 / 2.7354
F8 Risk Management / 5.67 / 2.8961
F9 Focused performance Measure / 4.77 / 3.9054
F10 Quality Improvement Measure / 7.33 / 2.3474
F11 Organization/Corporate Culture / 14.57 / 2.3396
F12 Implementation Cost / 14.93 / 2.7814
F13 Software development, testing, troubleshooting & Crises
Management / 16.30 / 2.7741
F14 IT Infrastructure / 14.68 / 2.7106
F15 Selection of ERP Package / 14.27 / 2.8442
F16 Data Conversion & Integrity / 15.08 / 3.5698
F17 Legacy System Consideration / 16.38 / 2.7554
F18 Vanilla ERP / 15.64 / 2.6367
F19 System Documentation / 14.76 / 3.2905
F20 Project Team / 17.38 / 2.05923
F21 Implementation Strategy & Timeframe / 24.58 / 2.21396
F22 Consultant Selection / 24.96 / 2.82814
F23 Vendor/Customer Relationships / 26.88 / 2.84741
F24 Project Management / 24.78 / 2.81606
F25 Client Consultations / 24.26 / 2.64042
F26 User Involvement / 25.38 / 3.06987
F27 User Education & training / 26.18 / 2.92554
F28 Personnel/Staff / 25.74 / 2.59363
F29 Employee Attitude & Morale / 24.86 / 3.09054
F30 Empowered Decision Makers / 27.38 / 2.05923
KMO AND BARRET’s test
1.6 Tools Adopted and Statistical Techniques Used for the Study
The questionnaires (three close-ended) were designed in such way that it was explaining full purpose of the research along with the proper guidance to fill it. Each questionnaire was attached with a cover letter and thanks letter. It was distributed with the help of email and intranet of top 10 IT (ERP) sectors companies. The investigator had collected data from 500 Indian ERP consultants from top 10 companies of IT (ERP) sector. Clear cut guidance was given to fill up the responses to the items in the tools (three close-ended questionnaires). Filled questionnaires were collected back. The confidentiality of the responses was assured. After collection of the questionnaire scores were assigned and systematically pooled for further analysis. It took 15-20 minutes to complete the each questionnaire. The scoring of the items were done according to the instructions received in manual The scoring was done on a Likert five point scale ranging from strongly disagree (1) to strongly agree(5).Scale range was analyzed between 30 to 150 for Likert Five Point Scale.
The following statistical techniques were used for analyzing the data as per the objectives of this research project
Ø Cronbach’s Alpha to find out the reliability of the survey instruments(questionnaires)
Ø Guilford’s Formula to check validity of the customized survey instruments(questionnaires)
Ø Descriptive Statistics(arithmetic mean and standard deviation) to map the perception of respondents(Indian ERP consultants)
Ø Friedman mean rank test to rank the CSFs for ERP implementation at Indian SMEs
Ø Kendall W test to check the reliability and validity of the rank given by Indian ERP consultants
Ø Exploratory Factor analysis was used to explore the CSFs, CFFs and to validate the survey instruments (questionnaires). It was also used to identify the damnations for the customized survey instruments in order to facilitate its standardization process in future research.
TABLE 4: CRITICAL FAILURE FACTORS FAILURE FACTORS / MEAN / STANDARD DEVIATIONPOOR CONSULTANT EFFECTIVENESS / 4.57 / 0.49757
POOR BRP QUALITY / 4.46 / 0.50342
POOR PROJECT MANAGEMENT’ / 4.53 / 0.49765
POOR ERP PACKAGE SELECTION / 4.57 / 0.50987
HIGH TURNOVER RATE OF PROJECT MEMBERS / 4.36 / 0.49348
OVER RELIANCE ON HEAVY CUSTOMIZATION / 4.46 / 0.50987
POOR IT INFRASTRUCTURE / 4.46 / 0.49005
POOR KNOWLEDGE TRANSFER / 4.54 / 0.50787
UNCLEAR CONCEPT OF
ERP BY THE USER / 4.40 / 0.50897
UNREALISTIC EXPECTATIONS / 4.61 / 0.49005
HASTY PROJECT SCHEDULE / 4.50 / 0.50213
USER RESISTANCE TO CHANGE / 4.51 / 0.50547
POOR TOP MANAGEMENT SUPPORT / 4.67 / 0.49008
POOR SYSTEM TESTING / 4.63 / 0.47243
LACK OF FORMAL COMMUNICATION / 4.54 / 0.49005
SOFTWARE MODIFICATION / 4.60 / 0.50435
LACK OF FORMAL COMMUNICATION / 4.43 / 0.50078
SOFTWARE MODIFICATION / 4.52 / 0.49875
INFORMAL STRATEGY / 4.59 / 0.50878
PART TIME DEDICATION / 4.53 / 0.49213
FUNCTIONALITY PROBLEMS WITH THE SYSTEM / 4.61 / 0.49712
COST OVER RUNS / 4.51 / 0.50534
FIG 2: RELIABILITY TESTS
1.7 Major Findings
Major Findings of this research are listed below:
30 CSFs were found for the successful ERP implementation at Indian SMEs.
The 30 CSFs have different ranks (and hence different importance) given by the Indian ERP consultants
The customized survey instrument to explore the CSFs for the successful ERP implementation at Indian SMEs can be used as reliable survey tool for current and future research because of the high construct reliability of the survey instrument (questionnaire).
The customized survey instrument to rank the CSFs for the successful ERP implementation at Indian SMEs can be used as reliable survey tool for current and future research because of the high construct reliability of the survey instrument (questionnaire).
The customized survey instrument to explore the CSFs for the successful ERP implementation at Indian SMEs can be used as validate survey tool for current and future research because of the high construct validity of the survey instrument(questionnaire).
The customized survey instrument to rank the CSFs for the successful ERP implementation at Indian SMEs can be used as validate survey tool for current and future research because of the high construct validity of the survey instrument(questionnaire).
All the 30 CSFs can be categorized into 11 categories to form a unified structure for successful ERP implementation at Indian SMEs because all the 30 CSFs are not fully independent from each others. Few of them had strong factor loading (correlation) among each other and exploration factor analysis was valid .Eleven dimensions were identified for the customized survey instrument (questionnaires) related to identification (exploring) of the CSFs for the successful ERP implementation at Indian SMEs, in order to facilitate the standardization process of the customized survey instrument (questionnaire) in future research.
9)Checklist and guidelines have been provided for successful ERP implementation at Indian SME’s
1.9 RECOMMENDATIONS:
Top Management Commitment and Support- The commitment and support of the top management (from both the side vendor as well as the client side) should be continuous throughout the process, for the successful ERP implementation at Indian SMEs.
Ø Change Management Process- The change management approach will ensure the acceptance and readiness of the ERP consultants, ERP vendor and Indian SMEs for the successful ERP implementation as it allows the Indian SMEs to get the benefits from using ERP. It will also help to reduce the customization by facilitating best software fit process for Indian SMEs.
Ø BPR and Software Configuration- Modifications in ERP package should be avoided to reduce the amount of errors and to take the full advantage of newer versions of the ERP systems at Indian SMEs. Aligning the Indian SMEs business process to the ERP implementation package is important.
Project Champion- The presence of an effective project champion for the successful ERP implementation at Indian SMEs is must, who can perform the crucial functions of transformational leadership, facilitation, and marketing of the ERP implementation to the ERP users at Indian SMEs.
Ø Business Plan, Vision- Indian SMEs must carefully define why the ERP is being implemented and what critical business need the ERP system will address, that will helps to ERP consultants, ERP vendor and Indian SMEs for better customization at Indian SMEs.
Ø Effective Communication Plan- For successful ERP implementation at Indian SMEs it is necessary that ERP consultants, ERP vendor and Indian SMEs should pay particular attention to communicate expectation, changes, future plans etc to the entire team as it tends to have much better chance of achieving implementation correctly at the Indian SMEs.
Ø Post Implementation Evolution- There should be some allowance for some kind of post- evaluation for successful ERP implementation at Indian SMEs, there is a need for an allowance for a feedback network from both the side ERP consultants (ERP vendors) as well as from Indian SMEs side.
Ø Risk Management- ERP consultants, ERP vendor and Indian SMEs should have proper risk management strategy to minimize the impact of unplanned incidents by identifying and addressing potential risks before significant consequences occur for the successful ERP implementation at Indian SMEs.
Ø Focused Performance Measures-It is needed to ensure expected outcomes are achieved by the ERP implementation for Indian SMEs. ERP consultants, ERP vendor and Indian SMEs should enable effective measurement for the SMEs business process improvement provided by the ERP implementation at Indian SMEs.
Ø Quality Improvement Measures- It is neccessory that data accuracy, consistency, frequency of use, redundancy, data relevancy, data cleansing, consolidation, transformation and validation related issues are handled and properly managed by the ERP consultants, ERP vendor and Indian SMEs for the successful ERP Implementaion at Indian SMEs.
Ø Organization/Corporate Culture- ERP consultants, ERP vendor and Indian SMEs should be ready to change or modify the culture by changing the way it works. The focus, decision making process, attitude to staff; stability etc should also be changed if needed for the successful fit with ERP implementation at Indian SMEs.
Ø Implementation Cost-The nature of ERP implementations at Indian SMEs are such that there are usually unforeseen and unexpected occurrences that may increase the overall costs for ERP implementation. Therefore, ERP consultants, ERP vendor and Indian SMEs should promote flexible budget policy for the successful ERP implementation at Indian SMEs.
Ø Software Development, Testing, Trouble Shooting and Crises Management- The need for
troubleshooting skills will be an ongoing requirement for the successful ERP implementation at Indian SMEs. If possible ERP consultants, ERP vendor and Indian SMEs team should consider the inclusion of testing exercises as well as simulation exercises during all the phases of ERP implementation at Indian SMEs on the basis of major or minor scenarios.
Ø IT Infrastructure - ERP implementation at Indian SMEs involves a complex transition from legacy systems business processes to an integrated IT infra-structure and common business process throughout the life cycle of Indian SMEs.
Ø Selection of ERP Package- The choice of the right ERP package for Indian SMEs involves important decisions regarding budgets, timeframes, goals, and deliverables that will shape the entire ERP implementation process along with the future of ERP implementation at Indian SMEs. Right ERP package may help to ensure minimal modification and successful use of ERP implementation at Indian SMEs.
Ø Data Conversion and Integrity- It means data loaded from existing legacy systems or documents must be of high quality for successful ERP Implementation at Indian SMEs. Timely and accurate data in a single consistent format is throughout fundamental requirement for the effectiveness of ERP implementation at Indian SMEs.
Ø Legacy System Considerations- The current business process and old systems determine the IT and change related requirements for the successful ERP implementaion at Indian SMEs. After evaluating the existing legacy system, ERP consultants, ERP vendor and Indian SMEs may be able to define the nature and problems that might be likely to meet during the ERP implementation at Indian SMEs.
Ø Vanilla ERP- It can be used with a minimum customization and for an uncomplicated implementation strategic changes in the business process of Indian SMEs to fit the ERP package best into the business processes with minium complexity and risk.
Ø System Documentation- Well-designed and well-built documentation related to ERP implementation at Indian SMEs and its use can save time and money on support costs after the ERP Implementation is in place for both the ERP consultants as well as for Indian SMEs.