Erp Case Studies

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Int. J. Production Economics 75 (2002) 83–96

Successful implementation of ERP projects: Evidence from two case studies Jaideep Motwania,*, Dinesh Mirchandanib, Manu Madanc, A. Gunasekarand Department of Management, Seidman School of Business, Grand Valley State University, 401 W. Fulton, #409C, Grand Rapids, MI 49504, USA b Seidman School of Business, Grand Valley State University, 401 W. Fulton, #456C, Grand Rapids, MI 49504, USA c College of Business and Economics, University of Wisconsin–Whitewater, 5050 Carlson Hall, Whitewater, WI 53190, USA d Department of Management, University of Massachusetts, North Dartmouth, MA 02747-2300, USA a

Abstract This research examines what factors facilitate or inhibit the success of ERP projects and what actions can be taken to bring troubled ERP projects under control. It uses a case study methodology grounded in business process change theory to compare a successful ERP implementation with an unsuccessful one. Data was collected by conducting interviews at various levels of the subject organizations and by examining their archived records when available. The study proposes that a cautious, evolutionary, bureaucratic implementation process backed with careful change management, network relationships, and cultural readiness can lead to a successful ERP project implementation as opposed to a revolutionary project scope mandated autocratically by top management without organizational readiness and proper change management. Some actions are also recommended that can help bring troubled ERP projects under control. r 2002 Elsevier Science B.V. All rights reserved. Keywords: ERP systems; BPC; Project management

1. Introduction It is well known by now that improper implementation of Enterprise Resource Planning (ERP) software projects can cause considerable problems for companies [1]. For instance, Hershey Foods Corporation in 1999 reported a 19% drop in 3rd-quarter profits and a 29% increase in *Corresponding author. Tel.: +1-61633-67467; fax: +161633-67445. E-mail addresses: motwanij@gvsu.edu (J. Motwani), mirchand@gvsu.edu (D. Mirchandani), madanm@uwwvax.uww.edu (M. Madan), Agunasekaran@umassd.edu (A. Gunasekaran).

inventories over the previous year due to orderprocessing problems caused by its faulty $112 million ERP implementation [2]. The city of Oakland too reported problems of missing or erroneous paychecks generated for city employees by its $21 million ERP project [3]. Miller Industries reported a $3.5 million operating loss in the 4th-quarter of 1999 due to the costs and inefficiencies of its ERP system, while WW Grainger Inc. reported a $11 million reduction in operating earnings from its improper ERP implementation [4]. These numbers are startling but what is more a cause of concern is that these reported instances involve the software of all

0925-5273/02/$ - see front matter r 2002 Elsevier Science B.V. All rights reserved. PII: S 0 9 2 5 - 5 2 7 3 ( 0 1 ) 0 0 1 8 3 - 9

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primary ERP vendors. Thus fault cannot be attributed to only one vendor. On the other hand, McKesson HBOC has reported a successful implementation of its $50 million ERP back-office system that now processes sales orders totaling 1.5 million line items and $100 million of business each day [5], whereas CaseBook Water & Power Technologies, a $30 million manufacturer of water purification systems has seen improvements in materials management, project management, and employee productivity due to its ERP system [6]. Given the large financial commitment that an ERP project requires and the potential benefits it can offer if successfully implemented, it is important to understand what is needed to ensure a successful ERP implementation. Thus, two research questions are central to this paper: (1) What factors facilitate or inhibit the success of ERP projects, and (2) what actions can be taken to bring troubled ERP projects under control?...
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