Critical Success Factors of Enterprise Resource Planning Systems Implementation Success in China

Topics: Enterprise resource planning, Manufacturing resource planning, Business process reengineering Pages: 21 (6859 words) Published: May 4, 2012
Critical Success Factors of Enterprise Resource Planning Systems Implementation Success in China Liang Zhang, Matthew K.O. Lee, Zhe Zhang1, Probir Banerjee Department of Information Systems, City University of Hong Kong, Hong Kong, China;; 1 Faculty of Business Administration, Northeastern University, Shenyang, China ERP systems were introduced to China at the beginning of 1980s when several state-owned companies adopted foreign ERP packages. Until now, nearly 1,000 companies in China have implemented material requirements planning (MRP), manufacturing resources planning (MRP II) or ERP systems. During the past twenty years, foreign ERP vendors dominated China’s ERP market in that ERP represents bestpractice process. Figure 1 describes 98’ ERP market share distribution in China, foreign ERP vendors took up more than 90 percent. In this pie chart, only Kingdee (2.3%) is a domestic ERP vendor. Thus, in this research foreign ERP packages are considered as the research objects. While a formal scheme for classifying ERP systems has long existed, its definition still differs widely among practitioners. Small companies may claim that a full-fledged ERP system has been implemented, while some big companies did not even think their systems have achieved MRP or MRP II. As a result, it is not meaningful to separate the different ERP versions. Thus, in this study, the term “ERP” is used as a general term to represent all ERP versions, namely, MRP (i.e., materials requirements planning), closed-loop MRP (i.e., MRP with capacity planning and shop floor), and MRP II (i.e., closed-loop MRP integrated with the other functions such as finance and marketing). The organization of this paper is as follows: in the next section, literature review is illustrated. Research methodology follows with literature review and research framework is developed after the literature review. In the section of research framework, details of the proposed model and variables are explained. Then data analysis is conducted to explain the findings. Discussion is made on issues in the research and conclusion about the study ends the paper.

ERP implementation issues have been given much attention since two decades ago due to its low implementation success. Nearly 90 percent of ERP implementations are late or over budget [16] and the success rate with ERP implementation is about 33%. In China, the success rate of implementing ERP systems is extremely low at 10% [28] which is much lower than that in West countries. This study attempts to study critical success factors affecting enterprise resource planning (ERP) systems implementation success in China with focus on both generic and unique factors. User satisfaction and White’s ABCD classification method are used to judge whether an ERP system implementation is a success or a failure. Survey methodology and structural equation modeling technique of PLS-Graph are used to collect and analyze data. Discussions on the results of data analysis are made.

1. Introduction
Kumar et al (2000) define enterprise resource planning (ERP) systems as “configurable information systems packages that integrate information and information-based processes within and across functional areas in an organization”. ERP systems are expensive, and once ERP systems are implemented successfully, significant benefits such as improved customer service, better production scheduling, and reduced manufacturing costs can be gained. However, the successful implementation rate is low and many firms that have gained some benefits from ERP have yet to exploit the full potential of ERP in their organizations. About 90 percent of ERP implementations are late or over budget [16] and ERP implementation success rate is only about 33%. However, the success rate of implementing ERP systems in China is extremely low at 10% [28]. The steep difference of ERP systems...

References: 0-7695-1874-5/03 $17.00 © 2002 IEEE
Implementation”, Production and Management Journal (3), 1997, pp
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