ERP implementation at SMEs: analysis of five Canadian cases1,2

Brent Snider3, Giovani J.C. da Silveira and Jaydeep Balakrishnan

Haskayne School of Business, University of Calgary

2500 University Drive NW, Calgary, Alberta, Canada T2N 1N4

Published in the International Journal of Operations and Production Management,

29, 1, 2009, pp 4-29.

1
A previous and shorter version of this paper appeared in the proceedings from the 35th Annual Meeting of the
Western Decision Sciences Institute, Waikoloa, Hawaii, April 2006. Professor da Silveira’s research is supported by
the Natural Sciences and Engineering Research Council of Canada, Discovery Grant # 283134-04.
2
We sincerely thank the reviewers for suggestions that helped us to significantly improve the paper.
3
Corresponding author. Phone 403-220-7164. Email [email protected].
ERP implementation at SMEs: analysis of five Canadian cases

Abstract

Purpose - This paper explores the Critical Success Factors (CSFs) of Enterprise Resource

Planning (ERP) system implementation at Small and Medium sized Enterprises (SMEs).

Design/methodology/approach – Five case studies of Canadian SMEs were conducted. They

included interviewing individuals from five roles at each organization and gathering project

documents. Following an evaluation of each project’s success (within-case analysis), cross-case

analysis was conducted to elicit influential and distinctive factors.

Findings – We identified factors that appeared to explain variation between successful and

unsuccessful implementations at SMEs, besides factors that appeared to be innovative or counter-

intuitive in light of the established literature.

Research limitations/implications – The study reinforces the need for more research that is

focused on SMEs. All cases were of Canadian SMEs with either a manufacturing or distribution

focus, potentially limiting the generalizability of findings to other industries or countries.

Practical implications – By identifying relevant CSFs for SMEs, managers can better prioritize

implementation efforts and resources to maximize success of ERP implementations.

Originality/value – This appears to be one of the first studies to focus on the CSFs of ERP

implementation at SMEs.

Keywords – Implementation, Enterprise Resource Planning, multiple case studies, triangulation.

Paper type – Research paper

2
Introduction

Small and Medium sized Enterprises (SMEs) are of critical importance to many economies.

Firms with less than 500 employees provided 51% of all employment in the United States as of

March, 2004 (US Census Bureau, 2004) and 64% of all Canadian private sector employment in

2005 (Industry Canada, 2006). In the European Union, firms with 250 employees or less

provided 67% of employment outside the financial industry in 2003 (Eurostat, 2007). While

SMEs are integral part of these economies, they also face numerous challenges in implementing

technologies such as Enterprise Resource Planning (ERP) systems, including a lack of human and

financial resources to support such initiatives (McAdam, 2002; Achanga et al., 2006).

Like many other technological advances, ERP systems were initially implemented mostly at

large organizations. Their relative absence from SMEs has probably been the main reason for the

research focus on large companies (e.g. Somers and Nelson, 2001; Mabert et al., 2003b; Mandal

and Gunasekaran, 2003; Umble et al., 2003; Nah and Delgado, 2006). More recently, however,

vendors began to provide SME-specific ERPs (Bingi et al., 1999; Bell and Orzen, 2007; Deep et

al., 2008). ERP adoption at SMEs has been catching up with large companies (Van Everdingen et

al., 2000; Mabert et al., 2003a).

Given that SMEs are significantly different from large organizations (Lee and Oakes, 1995;

Ghobadian and Gallear, 1996), and that more and more SMEs are implementing ERPs, the

relevant question would be, “what factors may influence ERP implementation success in SMEs,

and why?” This study aims to answer that question by studying ERP implementations at SMEs.

To the best of our knowledge, only Muscatello et al. (2003) and Loh and Koh (2004) have

specifically tackled this challenge, even though the former focused on subsidiaries of larger

firms, and while the latter used interviews as support for findings, the listed CFSs appeared to be

3
mainly based on their literature review. Finally, Adam and O’Doherty (2000) studied Irish

organizations including SMEs; however, their focus was on implementation partnership and

duration. Thus, it appears there is a need and opportunity for new studies focused on the success

factors of ERP implementation at SMEs.

This paper is structured as follows. First, we review the literature mainly to identify ERP

Critical Success Factors (CSFs) in general organizations. Next, we describe the data collection

and within-case analysis in this multiple case research. We then present and discuss the factors

that emerged from the cross-case analysis. Finally, we present the study contributions,

limitations, and conclusions highlighting implications for research and practice.

This paper contributes to research on ERPs in three main ways. First, it identifies factors that

may distinguish upon successful and unsuccessful ERP implementations in SMEs. Second, it

explains how and why specific factors may apply in particular to SMEs. Third, it reinforces the

need for more research that is focused on information technology (IT) in SMEs.

Background

ERP

ERPs emerged by the early 1990s by integrating programs that in previous decades existed

separately across functional areas (Jacobs and Weston Jr., 2007). According to Markus et al.

(2000b), ERPs emerged from the attempt to expand traditional MRP II systems to incorporate

activities outside the production scope. Mabert et al. (2003b) defined ERPs as “… enterprise-

wide on-line interactive systems that support cross-functional processes using a common

database” (p. 302). Al-Mashari et al. (2003) suggested that a basic ERP consisted of a database,

an application, and an integrated interface. Jacobs and Bendoly (2003) described ERPs as

4
corresponding to “… corporate infrastructures, much in the same way that physical highway

systems do” (p. 234). Davenport (1998) defined ERPs as “complex pieces of software” (p. 122)

whose implementation demanded great resources; they might deliver benefits, but as Bingi et al.

(1999) also suggested, implementation failure might have fatal consequences.

Various authors developed lists of ERP CSFs that were primarily based on studies at large

organizations. Loh and Koh (2004: 3440) classified CSFs from studies published between 1988

and 2000 into the three stages of “preparation, analysis & design”, “implementation”, and

“maintenance”. Our review (in Table I), similar to Loh and Koh’s (2004) review, updates and

complements the summary by summarizing the CSFs from studies published after the year 2000

(besides Esteves-Souza and Pastor-Collado’s [2000] study, that was not in their matrix). Our

update excludes some additional recent studies that have either focused on a few particular CSFs,

e.g. Robey et al. (2002), or developed theoretical frameworks based on a more limited number of

sources, e.g. Akkermans and van Helden (2002). As in Loh and Koh (2004), we divided CSFs

into three stages. Pre-implementation factors include variables of strategy and structure.

Implementation factors typically occur between software selection and going live. Post-

implementation relates to follow-up after going live.

Take in Table I

SMEs

The literature points out significant differences between SMEs and large organizations. SME top

management is usually involved in day-to-day activities (McCartan-Quinn and Carson, 2003).

However, managers may have limited formal training (Lee and Oakes, 1995). Absence of long-

term planning is another dominant factor (Gunasekaran et al., 1996). On the other hand, SMEs

5
have relatively informal structures and culture (Mintzberg et al., 2003, p. 217), which increase

cross-functional exchanges, and small management teams, which results in efficient decision-

making (Ghobadian and Gallear, 1996; McAdam, 2000). These later issues have been considered

particularly advantageous for major projects (Lee and Oakes, 1995).

One major disadvantage of SMEs is lack of human and financial resources (Ghobadian and

Gallear, 1996; Gunasekaran et al., 1996; McAdam, 2002; Achanga et al., 2006). Achanga et al.

(2006) stressed that staff shortages at SMEs might even require production to halt during

training. Skills upgrading may be needed, however SMEs often cannot afford extensive training

(Raymond et al., 1998). Furthermore, they may face challenges in paying for major consulting

(Kinni, 1995). Sun et al. (2005) indicated that such resource shortages might hinder project

success.

Regarding IT, SMEs seldom have dedicated IT staff, let alone a formal department (Adam

and O’Doherty, 2000; Mabert et al., 2003a). Major projects face increased external and internal

risks when compared to large organizations. Externally, SMEs are more fragile than large

companies (Rao, 2000; Shin, 2006) and face greater difficulty in obtaining credit (Lu, 2006).

Such external risks can lead to project delays or even abandonment (Serafeimidis and Smithson,

1999). Internally, SMEs may find it difficult to implement reengineering projects due to limited

spare resources (Eshelman et al., 2001; McAdam, 2002). Overall, they may face greater

challenges in adopting technology (Raymond et al., 1998; Shin, 2006). Finally, the cost of an

ERP implementation may be proportionally higher for SMEs than for large organizations (Mabert

et al., 2000), and SMEs may be more severely impacted by unsuccessful implementations

(Muscatello et al., 2003).

6
ERP implementation at SMEs

Various researchers have recommended research into the implementation and use of ERPs at

SMEs (e.g. Bernroider and Koch, 2001; Huin et al., 2003; Jacobs and Bendoly, 2003; Mabert et

al., 2003a; Muscatello et al., 2003; Sun et al., 2005). Huin (2004) argues that unless differences

between small and large firms are understood, managing ERP projects in SMEs “… will continue

to be slow, painful and at times even unfruitful” (p. 516).

However, not many studies appear to have tackled this challenge yet. Loh and Koh’s (2004)

review of the literature identified 10 CSFs, which were then confirmed by interviews across eight

SMEs from the UK. Soja’s (2006) ERP survey in Poland identified 16 factors at large

organizations but only two (out of 26) at firms with less than 300 employees. Muscatello et al.

(2003) studied four US manufacturing SMEs, however they were all subsidiaries of large firms

and they all had annual revenues greater than US$ 50 million. Buonanno et al. (2005) explored

the antecedents of ERP adoption in Italian large firms and SMEs. These and a few other studies,

e.g. Adam and O’Doherty (2000) and Shin (2006) provided valuable insights into the dynamics

of ERP implementation at SMEs.

Thus, it appears from previous studies that organizational conditions at SMEs differ from that

of large organizations. This suggests that the relative importance of CSFs in ERP implementation

may also differ. Since literature on ERP implementation at SMEs is relatively sparse, our paper

helps to narrow this knowledge gap by investigating ERP implementation at SMEs.

7
Methodology

Research approach

Research on ERPs has followed a progression that may be typical for new technologies (Jacobs

and Bendoly, 2003). Survey studies identified ERP success factors, e.g. Hong and Kim (2002),

and provided statistics on ERP adoption and benefits, e.g. Jones and Young (2006). Case study

research (Gattiker, 2002; Ash and Burn, 2003; Mandal and Gunasekaran, 2003; Muscatello et al.,

2003; Umble et al, 2003; Nah and Delgado, 2006) explored the nature and role of ERP success

factors. However, since they mostly focus on large companies, and SME characteristics differ

from large organizations, these studies may not explain ERP success in SMEs. For that reason,

we chose to carry out in-depth and multiple case study research to provide insight into what

explains ERP success at SMEs, which might not be possible with other methods. In particular, we

aimed to investigate how and why CSFs that were previously identified in the literature might or

might not explain ERP success in the SME context. Our use of the case study method we believe

sheds additional insight on the factors that affect ERP implementation in SMEs.

As a consequence of the in depth nature of the investigation, case studies are inherently very

time consuming. Thus sample sizes were limited; in our case it consisted of one pilot and five

actual studies. The effect of small sample size was mitigated by carefully selecting the

participating companies and by following Pettigrew’s (1990) protocol as explained in the

following paragraphs.

Meredith (1998), Eisenhardt (1989) and Stuart et al. (2002) suggested that using case studies

is best when existing perspectives seem not fit to new contexts. According to Morris et al. (1999),

8
ethnographic research based on interviews and analysis of content is useful to explore phenomena

from inside out, “… to describe a particular culture in its own terms” (p. 781).

Miles and Huberman (1994: 26) argued that multiple cases provide “… an even deeper

understanding of processes and outcomes of cases, the chance to test (not just develop)

hypotheses, and a good picture of locally grounded causality”. In accordance with the norm for

building theory from case studies, this research is based on “theoretical sampling” (Eisenhardt,

1989) to provide literal and theoretical replication (Yin, 1994).

Following this guidance, multiple Value Added Resellers (independent businesses that resell

software and provide implementation related consulting services) were requested to identify

organizations that had “successful” or “unsuccessful” implementations. Situations of “successful”

or “unsuccessful” ERP system implementations were selected following Pettigrew’s (1990)

recommendations for the choice of research settings: (i) the phenomenon must be “transparently

observable” (p. 275); (ii) cases must represent “… polar types.… which illustrate high and low

performance” (p. 275); and (iii) cases must be clearly familiar with the research phenomenon.

These three criteria guided both the choice (invitation) and confirmation (after acceptance by

each company) of organizations to be used as case studies. Hence, each participating company

was required to:

Be a small (i.e. with less than 49 employees) or medium (i.e. between 50 and 499

employees) sized business (the focus of the study);

Have implemented ERP within the previous 36 months, and used it for six months or

more. This was so that the organization had some reasonable time to assess the impact of

9
 the new system, while also ensuring that the implementation was reasonably recent to

facilitate interviews and document retrieval (following recommendations i and iii);

Be in the manufacturing or distribution business. These organizations typically use more

ERP modules than service organizations, which increases the complexity of the project

and in turn provides richer research data (following recommendations i and iii);

The final choice of companies had to provide a balanced number of ‘successful’ and

‘unsuccessful’ cases to be used in the analysis (following recommendation ii).

Eleven companies were contacted with a recruitment letter. Six companies declined due to

insufficient time or the departure of employees who played a major role in their ERP projects.

Five companies agreed to participate in the study. The five cases exceeded the minimum number

of four required for multi-case research (Eisenhardt, 1989), and conformed to the choice criteria

discussed above. Thirty-four separate interviews were conducted with 20 individuals at those five

companies. All companies were located in Canada.

At least two other studies focused on ERP implementations in Canadian companies. Kumar et

al. (2002) emphasized ERP adoption processes; they called for further studies focused on the

analysis and impact of ERPs in business organizations. More recently, Raymond and

Uwizeyemungu (2007) investigated the contextual variables that might serve as antecedents to

ERP implementation by Canadian SMEs.

Data collection

Different tactics were employed to improve construct validity. Primarily they included a pilot

case (Yin, 1994; Herzog, 1996; Sapsford and Jupp, 1996), and triangulation (Eisenhardt, 1989;

Yin, 1994).

10
 The pilot study case was representative of the intended case companies, as it met all of the

criteria to participate in the study (Sapsford and Jupp, 1996). Further criteria for selecting the

pilot case were accessibility and data availability (Yin, 1994). Access to the pilot company was

facilitated by personal contacts of one of the researchers. Furthermore, the pilot company retained

extensive documentation from their implementation, including detailed project meeting minutes

and budgets. Seven interviews with four individuals were conducted over two months. The pilot

study provided insight into scheduling interviews with multiple individuals, interviewing times

(about 30 to 45 minutes each), and analyzing a large volume of data from interview transcripts

and documents. Furthermore, minor revisions were made to question wording to improve clarity

and flow of interviews.

Two of Patton’s (1987) four triangulation approaches were employed in this study: (i) project

documents supplied methodological triangulation and (ii) priority questions were asked to

multiple interviewees to supply data triangulation. Each case involved seven separate interviews

of people in five organizational roles: one interview each with the Chief Executive Officer (CEO)

(except for Company 1, whose CEO was unavailable), the accounting manager, the operations

manager, and one internal project team member, and three interviews with the internal project

leader (at four companies, the internal project leader was also either the operations manager or

the accounting manager, so each of them provided four interviews in total). In summary, four

people gave four interviews each, one person gave three interviews, and the remaining fifteen

gave one interview each. All interviews were transcribed. All of the 20 individual participants

had the opportunity to edit the transcript (minor edits occurred in 11 of 34 transcripts); all

interviewees provided written confirmation that the transcript accurately reflected their responses.

11
 While quantitative research uses statistical analysis for generalization to populations,

qualitative research is focused on analytical generalization in the form of propositions (Yin,

1994). Besides providing the analyst with a more thorough understanding, multiple case studies

help to increase generalizability well beyond drawing conclusions from a single case (Hillebrand

et al., 2001).

Various tactics were employed to establish reliability of the study, as recommended by Yin

(1994) and Herzog (1996). First, as many steps of the research as possible were documented.

Second, a formal and presentable database of interviews and documents was prepared. Third, one

of the researchers was the only interviewer, enabling this activity to be consistently performed

across cases. Fourth, this research adhered to the four aspects that Yin (1994) described in how to

establish a chain of evidence, further increasing the reliability of the study.

Data analysis

Content analysis uses a set of procedures to make analytical inferences from qualitative data

(Weber, 1990). It is based on developing and applying a coding scheme to data. Weber’s (1990)

steps for creating a coding scheme were employed and, as Herzog (1996) recommended, rules

were developed for each code to improve reliability and accuracy of the analysis. Codes were not

developed until after all data was collected to make the analysis more context-sensitive compared

to using a prefabricated coding list (Miles and Huberman, 1994). Furthermore, the coding scheme

was revised based on an iterative process of testing on sample qualitative data until it was

considered highly reliable. Approximately 150 single-spaced pages of interview transcripts were

categorized into 1135 separate units of text. Following the rationale in Eisenhardt (1989) and

12
Miles and Huberman (1994), each case was individually examined prior to the cross-case

analysis.

Since the level of implementation success was the starting point for the cross-case analysis,

clear success criteria were required. Our study defined success relating to the extent that potential

benefits were achieved (Davenport, 1998), the costs associated with achieving those benefits, and

the duration since going live (Markus et al., 2000a). Shang and Seddon’s (2000) typology of

benefits was used as a starting point and further detailed based on the literature including Mabert

et al., (2000), Stefanou (2001), Jacobs and Bendoly, (2003), and Olhager and Selldin (2003).

Cross-case analysis was carried out to improve understanding and explanation, and to increase

generalizability of the findings (Miles and Huberman, 1994). The cross case analysis was

conducted with clusters of successful and unsuccessful projects to identify patterns in findings

(Stuart et al. 2002). The process used for classifying each case as successful or unsuccessful is

described in the next section. This assessment helped the researchers to distinguish between

influential and non-influential factors across the cases.

Overall, the analysis was heavily based on grounded theory as described in Strauss and

Corbin (1990), including the content analysis and within-case analysis stages. However, Miles

and Huberman’s (1994) more structured approach was also employed to aid in the cross-case

analysis, with tools such as meta-matrices being used.

Case study companies

All five companies reported common motivations for implementing a new ERP, namely solving

legacy system issues (e.g. lack of integration, untrustworthy data, etc.) and having a scalable

solution to handle business growth. At a minimum, all companies were utilizing the purchasing,

13
sales, inventory, and accounting modules of their software packages. Table II provides

demographic information for each case.

Take in Table II

Variables

Benefits. Multiple participants at each company were asked to rate the extent of cumulative

benefits specifically attributable to the project. Seven-point Likert scales with endpoints -3 (“very

negative”) and +3 (“very positive”) were applied to benefit categories previously developed from

the literature (as discussed above), and used to prompt discussion of potential benefits.

Cumulative results were adjusted for time since implementation (as explained below). Eight

benefit categories were used to assess implementation success. Interview responses and project

documents were used to substantiate scale values. Case 4 in particular revealed inconsistencies

for some benefit categories. For example, an average rating of +1.7 was recorded for managerial

benefits; however, CEO’s comments such as “the visibility of key performance indicators was

lost… I still don’t have a single screen that shows me these key indicators” suggested that was

not the case. Based on the volume and richness of Case 4’s interview responses, their scale values

received less weight in success assessment than in the other cases.

Costs. Costs with ERP implementation include not only software, but also items such as

training, hardware, and consulting (Willis et al., 2001). The lack of a formal budget at some

companies left them without the ability to compare actual versus budgeted costs, as described in

the literature (e.g. Hong and Kim, 2002; Mabert et al., 2003b). Correspondingly, a relative

measure of actual project cost as a percentage of annual revenue was used. The accounting

manager at each company was asked to detail project costs in five categories (software, training,

14
modifications, services, other), and to provide an estimate of annual revenue for the current year.

This information was requested prior to the interview to facilitate data retrieval. Project cost was

incorporated in the cross-case analysis of benefits so that if two companies achieved similar

benefits but at different costs, the company that incurred the lower project costs (as % of annual

revenue) was considered as relatively more successful.

Duration. Besides reviewing project documents, multiple participants at each company were

asked for how long they had been using the new ERP. Triangulated values were always

consistent. As the duration since going live increases, more categories of project benefits tend to

be realized (Markus et al., 2000a; Hitt et al., 2002; McAfee, 2002; Gattiker and Goodhue, 2005;

Weider et al., 2006,). For example, Gattiker and Goodhue (2005) found evidence of significant

performance improvements over the first year after the implementation, and of continuous

improvements (albeit at a decreasing rate) afterwards. Thus, in assessing ERP benefits, we

included an additional item corresponding to the time elapsed since its implementation in the

company. In other words, if two implementation projects obtained similar benefits but in

different time lags, the company with a significantly shorter duration since going live would be

considered relatively more successful.

Table III presents a summary assessment of project benefits, costs, and duration for each case.

Implementation success was determined by the extent and nature of these variables as they were

assessed in each company. This evaluation is detailed below.

Take in Table III

15
Implementation success

Company 1 had been live on Software A for approximately two and a half years and actual

project costs totaled just below 0.5% of annual sales. Operational benefits had not materialized,

as inventory levels and delivery lead times were essentially unchanged. Administrative

improvements were realized, e.g. office overtime was eliminated. Cash management benefits

included a reduction in accounts receivable collection time. Managerial benefits resulted from

improved access to information and improved efficiency in investigating specific transactions.

On the IT side, system stability was similar to the legacy system, while costs were only slightly

higher. Strategic benefits were limited to slightly improved customer service. Organizational

benefits resulted as employees communicated with each other more. Employee morale improved

slightly and was attributed to greater ability to complete tasks on time.

Company 2 had been live on Software A for approximately three years with actual project

costs comprising approximately 0.4% of annual sales. Operational improvements directly

attributable to the project had not materialized. However, substantial administrative

improvements occurred to the point that employees requested more responsibilities, even as

business volume increased. Cash management benefits included improvements in receivable

collection and cash forecasting abilities. Managerial benefits included timely access to sales and

financial performance indicators. IT system stability improved significantly from the legacy

system, but costs were much higher. Strategic benefits included improved customer service and

business growth support. Organizational benefits were mixed, as positive improvements in

morale and empowerment at the head office were offset by branch employees being generally not

pleased with the new system.

16
 Company 3 had been live on Software B for approximately one and a half years with actual

project costs totaling about 2.9% of annual sales. Operationally, inaccurate inventory data and

planning led to increased inventories and frequent order expediting. On the administrative side,

staff felt they had to start completing tasks providing limited customer service or value. Minor

cash management improvements resulted from better visibility of future revenues. Managerial

abilities were inhibited as the new system did not provide key performance data. IT stability

improved somewhat, although costs were slightly higher. Overall, improvements in some areas

were offset by problems in others. Organizational results were generally negative due to job

security concerns and reduced morale attributed to the many project challenges.

Company 4 had been live on Software A for about one year. Project expenses totaled

approximately 3.0% of annual sales. Operationally, inventory levels almost doubled soon after

going live; however, benefits such as improved inventory analysis and cycle counting were

realized a year later. A significant increase in administration cost was attributed to data input

requirements. Cash management abilities were considered unchanged. Managerial results were

negative, as the owner lost visibility of key performance indicators. IT stability improved but

costs increased significantly. Strategic benefits such as supporting business growth and customer

service were realized. Organizational benefits were negative in the first six months. Employee

morale improved slightly after one year.

Company 5 had been live on Software B for approximately one year. Project costs

represented approximately 1.5% of annual sales. Operational benefits included highlighting

inventory shortages and aiding production planning. Administrative improvements were realized

as data only had to be entered once, and the previous requirement of reconciling multiple systems

was eliminated. Cash management benefits were attributed to improved accounts receivable

17
visibility and detail. Managerial benefits resulted from the visibility of “live” sales data by region

and order tracking, enabling more responsive decision making. System’s stability was

comparable to the stability of legacy systems, but costs increased significantly. As with cases 2

and 4, the system supported business growth and customer service. Employee morale and

empowerment were also improved.

Results and Discussion

Research findings are presented and discussed in two categories. First, we review the factors that

appeared to clearly discriminate between successful and unsuccessful implementations across the

five cases. Next, we present distinctive factors that, although they could not explain variance in

implementation success, appeared to be innovative or run counter to knowledge available from

the literature; contrary to factors in the first category, these appeared to be unique to the SME

context.

Critical success factors

Table IV presents an overview of the cross-case analysis leading to the identification of critical

factors. The critical factors that emerged from this analysis are described next. The factors are

summarized in Table V.

Take in Table IV

Take in Table V

Operational process discipline. The concept of process discipline has been formalized by

Collins and Schmenner (1993) and Collins et al. (1998). In our study, companies were asked

about documentation and consistency in executing operational processes (i.e. information flows)

prior to the implementation. Companies having greater consistency prior to implementation

18
appeared to achieve more successful implementations regardless of the level of documentation.

The two unsuccessful cases had good documentation, but low discipline in adhering to standards

set in documents. For example, Company 4 cited ISO audits that revealed non-conformance in

sales and engineering. Company 3’s poor record led to problems such as excess procurement to

buffer for inaccurate inventory data; as the Accounting Manager indicated, “We were a custom

job shop with ‘craftsmen’ who would each do things a little differently. The BOMs [bills of

materials] were ‘loose’ and standard routings were non-existent… it was very dysfunctional.”

Consequently, both companies had difficulty adhering to processes that were newly developed by

the ERP.

Overall, it seems that having inconsistent operational processes conflicts with the procedural

rigidity of ERPs. Where such inconsistency exists, it may be necessary to carry out some process

benchmarking and improvement prior to enforcing standardized procedures brought in by the

ERP. This finding looks consistent with Schniederjans and Kim’s (2003) conclusion (from a

large company survey) that best implementations involve reengineering processes before rather

than after the ERP introduction. Ross and Vitale (2000) similarly stated that ERP

implementations posed challenges as they “... were instilling discipline into relatively

undisciplined organizations.” (p. 240).

Thus, it appears that operational process discipline should be identified as a major CSF for

ERP introduction at SMEs, especially given their frequently informal type of environment.

Small internal team. Successful companies had implementation teams that were smaller in

size than the teams at unsuccessful companies. Four factors might explain the apparent lack of

effectiveness or larger teams. First, larger teams tended to stay more isolated, as the impression

of having complete horizontal expertise appeared to limit their interest in asking for input from

19
outside users. In contrast, smaller teams sought user assistance regularly as they lacked expertise

in certain areas. Company 2’s Operations Manager suggested this was the major reason behind

the team’s success. Conversely, a team member from Company 4 described how isolation of their

large team caused problems later on:

The implementation team [we] made decisions based on our team discussions. The team
was comprised of the main user of each department. Some conflict resulted after going
live with the end users – for example, engineering staff wanted more specific fields in the
system, and felt the system was not doing what they wanted. The implementation team
thought we had all the answers.

Second, larger teams had more difficulty in reaching consensus, and at times had conflicts

among department representatives. Smaller teams would be more able to focus and compromise

on what seemed best for the organization. Third, each of the two larger teams had at least one

unreliable member that did not complete tasks, which negatively affected the project. The smaller

teams suggested that a “sense of ownership” helped to give priority to project tasks whenever

possible. Finally, larger teams appeared more difficult to manage by either the external consultant

or the internal leader, which increased coordination costs.

In summary, it appears that using larger teams based on representation from each department

was negatively associated with implementation time, quality, and cost at SMEs. Companies

appeared to be better off by employing a smaller team that interacted as needed with the other

staff. This finding appears to be at least partially supported by the view in Akkermans and van

Helden (2002), Gattiker (2002), and Poba-Nzaou et al. (2008) that end-user involvement is a

CSF, although the issue of team size per se has apparently not been addressed in the past.

Project management capabilities. These capabilities involved documentation and leadership

to plan and control project tasks, responsibilities, and deadlines. In the often chaotic environment

of SMEs, formal documentation helped to ensure that tasks and deadlines were not missed.

20
Interestingly, implementation success appeared to be directly associated to who was the project

leader: companies having external consultants at the helm appeared to achieve greater success, as

consultants often had more relevant project management experience than internal leaders. Even

Company 5, whose internal leader had extensive project management experience, still outsourced

this task due to the leader’s inability to be relieved of regular responsibilities (as Accounting

Manager) during the project.

Given that internal leaders often had to carry on with regular (functional) duties in parallel to

the project, it did not look surprising that tasks such as project documenting might slip down their

priority list, significantly affecting the project. For example, project documents obtained at

Company 4 included brief (e.g. three lines) handwritten minutes with no conclusions, dates, or

responsibilities. Their Project Leader explained that, “the consultant helped us with setting up the

checklist of tasks to do, but the ongoing administration (typing meeting minutes, to do’s, etc.)

was all done by internal staff.” Moreover, they appeared to have no more than three project

meetings over a three month period (some six months before the live date). In turn, companies 2

and 5 had extensive project documentation including tasks, responsibilities, and target dates,

besides minutes of project decisions that were used as reference by the implementation team.

Company 5’s Project Leader illustrated this process:

We used MS Project and had a schedule with responsibilities, target dates, etc. We also
had weekly progress meetings where we tracked our progress. It was primarily handled by
the consultants. I worked closely with them – although they did the administration part of
the project management, most of the details came from myself.

Formal project management has been similarly identified as CSF in previous research (e.g.

Somers and Nelson, 2001; Zhang et al., 2003), though it has not been addressed whether it should

be externally or internally managed. One exception might be Soja (2006), who found that a

21
“detailed schedule” was only influential at large organizations; still, he appeared to be focusing

on initial rather than ongoing scheduling.

In conclusion, the findings suggested that SME success with ERP implementations appeared

to be associated to (i) assigning project management responsibility to the external consultant, and

(ii) continually reviewing and revising documents during the implementation.

External end user training. We defined training as software specific instruction, and

education as general skill-upgrading. Cross-case analysis initially revealed no significant

variation in training (since all companies conducted some user training) or education (as only one

successful and one unsuccessful company included relevant post-secondary education in the

project). However, further investigation indicated that success might be associated to whether end

user training was provided by an internal team member or an external consultant: the two

unsuccessful companies used mostly the internal team; the three successful cases used an external

consultant. As discussed above, it seems that the internal members lacked time and expertise to

prepare and deliver training at the level required for the project.

Company 2’s end user training (including at branch locations) was conducted by the

consultant. The consultant was able to tailor the instruction based on business knowledge

acquired by working with the internal team. According to the Project Leader (and consistent with

findings in Chen et al. [2008]), combining the consultant’s pedagogical expertise with business

knowledge was critical. Conversely, Company 3 tasked team members with preparing and

conducting training; despite their business experience, their approach was less than effective, as

described by the Project Leader:

Each ‘core analyst’ prepared the training documents for their department. This resulted in
a wide range of quality and detail – the SCM (Supply Chain Management) area refused to

22
 prepare manuals. Our staff were trained on how to do their daily jobs on the new system,
but it was not in-depth enough. For example, some staff had one day of training three
weeks before we went live, and production staff got about a four-hour overview. It was
too much too quickly for the staff and a lot of it went right by them.

For some companies, one helpful aspect was that the internal team included most end users.

As long as they received effective training from the consultant, the remaining learning could be

carried out on the job. As explained by Company 5’s Project Leader, “We did not do a large

amount of training outside the implementation team. After we went live it was a ‘show as you go’

approach. This worked because the ratio of trained to untrained was low.”

Previous studies emphasized the importance of training (Mabert et al., 2003b; Nah and

Delgado, 2006; Finney and Corbett, 2007) and education (Muscatello et al., 2003). What we

found was that SMEs might particularly benefit by end user training that was conducted by an

external consultant due to lack of expertise or time of internal team members.

Management support. Interviewees independently identified factors that they associated with

management support. Financial backing, encouragement, and alleviating team members from

regular responsibilities were the most common themes. As with previous CSFs, we found clear

differences between successful and unsuccessful companies regarding those items. Management

support appeared particularly relevant due to their high level of involvement in SME routines,

besides their direct influence on resource allocation and informal communication.

Financial support was often defined in terms of adequate funding for consulting and training.

SMEs typically lacked technical expertise, thus the importance of such funding became clear.

Despite that, management at Company 4 still balked at the cost of a quality consultant; instead

they hired a lower cost independent consultant that had minimal experience with the new ERP.

According to their Project Leader: “Looking back, I think it was a mistake to use an independent

23
consultant that did not know the software. Financially the route we took was cheaper than paying

the re-seller’s hourly rates, but from an operational standpoint, it was a bad decision.”

The second aspect was encouraging staff towards the implementation, which included

management actions such as informal “championing” and attending to project meetings. Compare

the differences between companies 5 and 3:

One employee, who was the master of the old system, thought the old system was better
and had to be brought back in line. He was sharing his negative feelings towards the new
software with staff and that affects staff productivity. I would not describe it as actively
‘sabotaging’ the project, but if it were not for upper management’s support of the new
system we probably would have ended up with a hybrid of the new system and the old
system. (Project Leader, Company 5)
Management was not unified in support of the project. Some managers tried to subvert the
project, which was difficult to overcome. Implementation team members got behind on
their tasks because their managers were not supporting the project and providing them
time for their implementation responsibilities. (CEO, Company 3)

Perhaps the third aspect (alleviating team members from regular responsibilities) had a more

subjective than objective effect. All three successful companies hired temporary employees to

cover for project team members. Yet, in all cases the temporary staff left the company by the

beginning of the implementation, resulting in no significant reduction in team members

functional responsibilities. Nevertheless, team members were still positively impacted by

management’s sheer gesture to support their time in the project, regardless of the actual results.

Previous studies (e.g. Mabert et al., 2003b; Muscatello et al., 2003; Umble et al. 2003; Nah

and Delgado, 2006) similarly stressed the importance of management support through the ERP

implementation. This might be particularly relevant in SMEs due to their close-knit work

environment. Surprisingly though, Soja (2006) indicated that that this factor might be significant

only at large organizations.

24
 Qualified consultant. Project success appeared to be directly associated to the quality of the

consultant. For example, interviewees stated that project teams relied heavily on external

consultants because teams lacked software expertise and time. As described by Company 5’s

Project Leader: “I think the consultants are even more important than the internal team, especially

in this environment. How can you build a strong internal team when there could be as few as one

person with ERP experience – that is not a realistic expectation.”

Interviewees assessed the quality of a consultant by attributes including business

understanding, software knowledge, and soft skills. Concerning the first two aspects, consultants

should be able to match business process and software capabilities, and were expected to be

conversant not just in one module but in the whole software package. The third aspect was often

judged as even more important, given the above mentioned close-knit environment of SMEs, as

illustrated by a team member from Company 4:

The consultant’s ‘soft skills’ were terrible. He was condescending and would talk down to
the team. It got to the point where you did not want to talk with him, so you just tried to
solve things on your own, which is dangerous in this type of system. I think of the three
that soft skills are the most important to have in a consultant for this type of project. If
you don’t want to interact with the consultant, it doesn’t matter how good their business
or software understanding is.

A consultant’s relationship to success did not appear to be as prominent in previous studies.

For example, “use of consultants” was rated lowest among 22 CSFs in Somers and Nelson

(2001). This perhaps might be explained by respondents mixing the external consultant and the

internal project team into one single factor. However, other studies (Al-Mashari et al., 2003;

Finney and Corbett, 2007; Chen et al., 2008; Newman and Zhao, 2008) similarly stressed the

importance of this factor. Furthermore, the skills that defined a quality consultant in our study

appear to match ideas in Bingi et al. (1999), and the finding in Laukkanen et al. (2007) that small

companies often have limited knowledge to guarantee successful ERP implementations.

25
Distinctive factors

The following factors (summarized in Table VI) did not appear to explain success variance across

the five studies. However, because of their innovative or counter-intuitive nature, they appeared

to provide additional insight into the issues associated to ERP implementation in the SME cases.

Take in Table VI

Part-time dedication. The literature suggests that the internal team should be dedicated to the

project full-time, away from everyday operations (Shanks et al., 2000; Mabert et al., 2003b;

Umble et al., 2003). However, team members in the cases (including the project leader) were

generally expected to carry on with functional tasks during the implementation. Moreover, that

practice did not appear negatively associated to project success. One of the explanations for this

counter-intuitive finding might come from the “hard-working” culture of the SMEs, as

employees were expected to be flexible and take on additional responsibilities as needed.

Consider for example Company 5 CEO’s view: “Due to the size of our firm, we made it very

clear that this project was over and above their regular duties and that we expected them to do

whatever it takes, such as overtime and working weekends.” Soja (2006) similarly found that

“work time schedule” (i.e. time exclusively dedicated to the project) did not significantly

influence success at SMEs (as opposed to large organizations).

Lack of formal communication. Previous studies (e.g. Mabert et al., 2003b; Mandal and

Gunasekaran, 2003, Nah and Delgado, 2006) suggested that stakeholders should be provided

with a detailed implementation plan including target business objectives, and should be kept

informed about project progress. Concurring with Soja (2006), however, we found that in SMEs

this might not be necessary. All of the successful cases appeared to place minimal or no effort

towards formal communication, but no implementation challenges could be directly associated

26
with that decision. Conversely, Company 3’s extensive communication (e.g. placing posters on

project progress throughout the facility) did not seem to particularly aid the implementation.

What did seem to influence success was the ability to “interact” (i.e. two-way) with staff to

obtain their input and feedback. As explained by a team member from Company 2,

“Communication on the project’s progress to staff is not as important as letting them know time

frames of go live and dates that they are needed for the project. The weekly project meeting

minutes are not important for general staff. Communicating with them regarding their

requirements is much more important.”

Software modification. Achieving a proper fit between processes and software has been

considered critical for ERP success (Fan et al., 2000; Gattiker, 2002; Bendoly and Jacobs, 2004;

Quiescenti et al., 2006; Poba-Nzaou et al., 2008). Soh et al. (2000) and Gattiker and Goodhue

(2002), among others, stated that such fitting could be achieved by either modifying processes to

align with software or customizing software to align with processes.

In our study, all companies except Company 5 chose to significantly modify their software,

including two successful and two unsuccessful companies. This was somewhat surprising

because of the limited resources and IT skills available to the SME companies. Inevitably, all of

the four companies faced additional challenges in testing and simply understanding how the

software operated after the modifications. As stated by a team member from Company 1, “Where

we had those software problems of fixing one thing and unfixing another – we thought the two

things were totally unrelated. We would not even have thought of testing it.”

It appears that SMEs chose to adapt software to processes rather than vice-versa to avoid

failures in processes that were considered either strategic or reliable before the implementation.

The downside was that software integration and testing turned more difficult as staff lacked time

27
and technical expertise, and external consultants often lacked business-specific knowledge. The

only approach that would appear satisfactory would be gathering the internal team and

consultants to test the software together rather than assigning this responsibility to a single party.

Informal strategy. Contrary to expectations, at two of the three successful cases the business

strategy was not formalized or communicated to the team. Project decisions were based on

current business requirements and expected growth. This approach appeared to have a short-term

focus, yet over two and a half and three years later respectively, both companies 1 and 2 were

still experiencing significant benefits from the project. This would suggest that SMEs might

achieve project success despite a lack of formal strategy. Soja (2006) similarly found that

“linking with strategy” and “implementation goals” were not significant factors at SMEs. This

seems to be opposed to findings from large organization studies (Stratman and Roth, 2002; Al-

Mashari et al., 2003; Umble et al., 2003) that identified strategic visioning or planning as a CSF.

Other authors have stressed the informal nature of SMEs (Mintzberg et al., 2003, p. 217) and

their lack of proactive planning (Gunasekaran et al., 1996).

At least two hypotheses might explain the seemingly absent relationship between strategy

formalization and performance. First, legacy systems might be so inadequate that improvements

were obtained despite the strategic alignment. Second, SME staff might be tacitly aware of the

strategic vision to incorporate this vision into project plans.

Conclusion

This study explored CSFs of ERP implementation at five Canadian SMEs. It provided three main

contributions. First, as discussed earlier, while many studies have explored ERP implementations

in large organizations, fewer have focused on SMEs. Muscatello et al. (2003) focused on

subsidiaries of large firms. Loh and Koh (2004) interviewed eight British SMEs on ERP CSFs,

28
“critical people” and “critical uncertainties”; however, findings regarding CSFs in particular

appeared to be mainly based on literature review. Since there is strong evidence that SMEs

operate differently from large organizations, our study provided specific direction to SME

managers contemplating ERP implementation. This was done by identifying six factors (Tables

IV and V) that were considered critical to ERP implementation success in the SMEs under study.

Companies that managed these issues effectively had higher probability of implementation

success. Further, we identified four distinctive factors (Table VI) that SME managers would need

to be cognizant of when implementing ERP.

Second, our methodology of in-depth interviews with company personnel provided insightful

details to the factors that were influential in project success, which previous studies might not

have been able to provide. For example, our study clearly showed that operations process

discipline was a CSF at SMEs, but what does it mean in practice? Through the interviews, we

could identify that it consisted of aspects such as the need for standardized routings and bills of

materials. Such detailed insights extend to our distinctive factors as well. For instance, both

successful and unsuccessful companies had modified their software, thus making it unclear

whether such modification could be considered a CSF. However, the study detailed the problems

involved in this modification, i.e. that software integration and testing became a challenge due to

the lack of technical expertise on the part of the staff and the lack of business expertise on the

part of the external consultant. Thus, the findings point to the need for implementations to ensure

that both technical and business expertise is integrated during software testing.

Third, in relating our research to previous studies, it seems that some of our findings appeared

to concur with the literature, but others appeared to be either innovative or counter to existing

knowledge. In particular, our findings confirm that factors such as process discipline,

29
management support, and a qualified consultant with strong soft skills were important to ERP

implementation success at SMEs. Our findings concurred with previous studies that both project

management and end user training might be considered CSFs, however we further characterized

their nature in the SME environment. For example, given that the internal team had regular

responsibilities during the implementation, it appeared critical that the external consultant

managed the project and conducted end user training. Furthermore, our findings extend the

knowledge about user involvement (which was similarly identified in previous studies),

suggesting that it might be enhanced by the use of a small rather than large internal team.

Furthermore, findings including the success with part-time dedication of project staff, lack of

formal communication, emphasis on software (rather than process) modification, and the lack of

formal strategy processes appeared to be somehow counter-intuitive. These findings provide

additional insight into the issues involved in managing ERP implementations at SMEs.

As with other qualitative research, this study has limitations that might constrain the

generalizability or validity of findings. The research was based on five Canadian SMEs and thus

its results might not be generalizable to other countries. Chien et al. (2007) suggested that

macroeconomic factors across geographic locations had no significant influence on ERP success;

Newman and Zhao (2008) suggested that “culture” did not play a significant role either.

However, other studies indicated that country differences might influence aspects of ERP

implementation and usage (Sheu et al., 2004) and performance (Ragowsky et al., 2000). Thus,

there is an opportunity for replicating this study across different countries or regions. Second, the

research focused on manufacturing and distribution companies and thus findings might be not

generalizable to service industries. Third, even though we specifically collected data about

implementation, its benefits and challenges, some of these benefits and challenges could still be

30
attributable to efforts to improve their ERP system long after the implementation, as pointed out

by Gattiker and Goodhue (2005). Finally, our research was based on interviews that occurred

from one to three years after implementation. Under these circumstances, participants might have

limited or inaccurate memory. Although triangulation methods were employed including

interviewing a cross-section of project participants and incorporating project documents, a

longitudinal study observing an implementation project right from its start could have provided

more extensive information about the project motivation, implementation, and results.

The primary research implication concerns the need to carry out process improvement and

technology studies that focus on SMEs, as they perform a significant role in major economies. In

addition, the use of case studies can provide valuable detail and insight into such a complex

subject. For practitioners, our study indicates that implementing ERPs at SMEs can provide

significant benefits if some critical practices are in place. Such factors should aid to prioritize

implementation efforts and resources, and maximize the chances of success.

Our study could not directly compare the CSFs identified in previous studies based on large

organizations and the CSFs identified by us in this study on SMEs. This resulted from our focus

on a few companies. So, our results may not be sufficiently general to compare it previous studies

based primarily on large surveys. However, as noted earlier, our research does enhance the

understanding of the nature of ERP implementation in SMEs. As illustrated by our discussion

that included quotes from managers, we were able to provide some insights into the complex

nature of ERP implementations that surveys perhaps could not have. Future research could

involve a survey study that includes both large organizations and SMEs. This would allow a

statistically valid comparison of CSFs between both types of organizations.

31
References

Achanga, P.; Shehab, E.; Roy, R. and Nelder, G. (2006), “Critical success factors for lean

implementation within SMEs”, Journal of Manufacturing Technology Management, Vol. 17

No. 4, pp. 460-71.

Adam, F. and O’Doherty, P. (2000), “Lessons from enterprise resource planning implementations

in Ireland – towards smaller and shorter ERP projects”, Journal of Information Technology,

Vol. 15 No. 4, pp. 305-16.

Akkermans, H. and van Helden, K. (2002), “Vicious and virtuous cycles in ERP implementation:

a case study of interrelations between critical success factors”, European Journal of

Information Systems, Vol. 11 No. 1, pp. 35-46.

Al-Mashari, M.; Al-Mudimigh, A. and Zairi, M. (2003), “Enterprise resource planning: a

taxonomy of critical factors”, European Journal of Operational Research, Vol. 146 No. 2,

pp. 352-64.

Ash, C. G. and Burn, J.M. (2003), “A strategic framework for the management of ERP enabled e-

business change”, European Journal of Operational Research, Vol. 146 No. 2, pp. 374-87.

Bell, S. and Orzen, M. (2007), “Small, yet mighty”, APICS Magazine, Vol. 17 No. 6, pp. 40-3.

Bendoly, E. and Jacobs, F.R. (2004), “ERP architectural/operational alignment for order-

processing performance”, International Journal of Operations and Production Management,

Vol. 24 No. 1, pp. 99-117.

Bernroider, E. and Koch, S. (2001), “ERP selection process in midsized and large organizations”,

Business Process Management Journal, Vol. 7 No. 3, pp. 251-7.

32
Bingi, P.; Sharma, M.K. and Godla, J. (1999), “Critical issues affecting an ERP implementation”,

Information Systems Management, Vol. 16 No. 3, pp. 7-14.

Buonanno, G., Faverio, P., Pigni, F., Ravarini, A., Sciuto, D. and Tagliavini, M. (2005), "Factors

affecting ERP system adoption: A comparative analysis between SMEs and large

companies", Journal of Enterprise Information Management, Vol. 18 No. 4, pp. 384-426.

Chen, R., Sun, C., Helms, M.M. and Jih, W. (2008), “Role negotiation and interaction: an

exploratory case study of the impact of management consultants on ERP system

implementation in SMEs in Taiwan”, Information Systems Management, Vol. 25 No. 2, pp.

159-73.

Chien, S.; Hu, C.; Reimers, K. and Lin, J. (2007), “The influence of centrifugal and centripetal

forces on ERP project success in small and medium-sized enterprises in China and Taiwan”,

International Journal of Production Economics, Vol. 107 No. 2, pp. 380-96.

Collins, R.S. and Schmenner, R.W. (1993), “Achieving rigid flexibility: factory focus for the

1990s”, European Management Journal, Vol.11 No.4, pp. 443-7.

Collins, R.S., Cordon, C. and Julien, D. (1998), “An empirical test of the rigid flexibility model”,

Journal of Operations Management, Vol.16 No.2/3, pp. 133-46.

Davenport, T.H. (1998), “Putting the enterprise into the enterprise system”, Harvard Business

Review, Vol. 76 No. 4, pp. 121-31.

Deep, A., Guttridge, P., Dani, S. and Burns, N. (2008), “Investigating factors affecting ERP

selection in made-to-order SME sector”, Journal of Manufacturing Technology Management,

Vol. 19 No. 4, pp. 430-46.

33
Eisenhardt, K.M. (1989), “Building theories from case study research”, Academy of Management

Review, Vol. 14 No. 4, pp. 532-50.

Eshelman, R.G., Juras, P.E. and Taylor, T.C. (2001), "When SMALL COMPANIES

implement...BIG SYSTEMS", Strategic Finance, Vol. 82 No. 8, pp. 28-33.

Esteves-Souza, J. and Pastor-Collado, J. (2000), “Towards the unification of critical success

factors for ERP implementations”, Proceedings of the 10th Annual Business Information

Technology (BIT) Conference, Manchester, 9 pp.

Eurostat (2007), “European business - 2006 edition - chapter 1: business economy overview”,

available from http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-BW-06-001-

01/EN/KS-BW-06-001-01-EN.PDF. Accessed on June 22, 2008.

Fan, M.; Stallaert, J. and Whinston, A. (2000), “The adoption and design methodologies of

component-based enterprise systems”, European Journal of Information Systems, Vol. 9 No.

1, pp. 25-35.

Finney, S. and Corbett, M. (2007), “ERP implementation: a compilation and analysis of critical

success factors”, Business Process Management Journal, Vol. 13 No. 3, pp. 329-47.

Gattiker, T.F. (2002), “Anatomy of an ERP implementation gone awry”, Production and

Inventory Management Journal, Vol. 43 No. 3/4, pp. 96-105.

Gattiker, T.F. and Goodhue, D.L. (2002), “Software driven changes to business processes: an

empirical study of impacts of Enterprise Resource Planning (ERP) systems at the local

level”, International Journal of Production Research, Vol. 40 No. 18, pp. 4799-814.

34
Gattiker, T.F. and Goodhue, D.L. (2005), “What happens after ERP implementation:

understanding the impact of interdependence and differentiation on plant-level outcomes”,

MIS Quarterly, Vol. 29 No. 3, pp. 559-85.

Ghobadian, A. and Gallear, D.N. (1996), “Total quality management in SMEs”, Omega, Vol. 24

No. 1, pp. 83-106.

Gunasekaran, A.; Okko, P.; Martikainen, T. and Yli-Olli, P. (1996), “Improving productivity and

quality in small and medium enterprises: cases and analysis”, International Small Business

Journal, Vol. 15 No. 1, pp. 59-72.

Herzog, T. (1996), Research Methods in the Social Sciences, Prentice-Hall, Upper Saddle River,

NJ.

Hillebrand, B.; Kok, R.A.K. and Biemans, W.G. (2001), “Theory-testing using case studies: a

comment on Johnston, Leach, and Liu”, Industrial Marketing Management, Vol. 30 No. 8,

pp. 651-7.

Hitt, L.M.; Wu, D.J. and Zhou, X. (2002), “Investment in enterprise resource planning: business

impact and productivity measures”, Journal of Management Information Systems, Vol. 19

No. 1, pp. 71-98.

Hong, K.-K. and Kim, Y.-G. (2002), “The critical success factors for ERP implementation: an

organizational fit perspective”, Information and Management, Vol. 40 No. 1, pp. 25-40.

Huin, S.F. (2004), “Managing deployment of ERP systems in SMEs using multi-agents”,

International Journal of Project Management, Vol. 22 No. 6, pp. 511-17.

35
Huin, S.F.; Luong, L.H.S. and Abhary, K. (2003), “Knowledge-based tool for planning of

enterprise resources in ASEAN SMEs”, Robotics and Computer-Integrated Manufacturing,

Vol. 19 No. 5, pp. 409-14.

Industry Canada (2006), “Key small business statistics - July 2006”, available from

http://strategis.ic.gc.ca/epic/site/sbrp-rppe.nsf/en/rd02030e.html. Accessed on June 22, 2008.

Jacobs, F.R. and Bendoly, E. (2003), “Enterprise resource planning: developments and directions

for operations management research”, European Journal of Operational Research, Vol. 146

No. 2, pp. 233-40.

Jacobs, F.R. and Weston Jr., F.C. (2007), “Enterprise resource planning (ERP) – A brief history”,

Journal of Operations Management, Vol. 25 No. 2, pp. 357-63.

Jones, M.C. and Young, R. (2006), “ERP usage in practice: an empirical investigation’,

Information Resources Management Journal, Vol. 19 No. 1, pp. 23-42.

Kinni, B.T. (1995), “Process improvement, part 2”, Industry Week, Vol. 244 No. 4, pp. 45-50.

Kumar, V.; Maheshwari, B. and Kumar, U. (2002), “Enterprise resource planning systems

adoption process: a survey of Canadian organizations”, International Journal of Production

Research, Vol. 40 No. 3, pp. 509-23.

Laukkanen, S., Sarpola, S. and Hallikainen, P. (2007), “Enterprise size matters: objectives and

constraints of ERP adoption”, Journal of Enterprise Information Management, Vol. 20 No. 3,

pp. 319-34.

36
Lee, G.L. and Oakes, I. (1995), “The ‘pros’ and ‘cons’ of total quality management for smaller

firms in manufacturing: some experiences down the supply chain”, Total Quality

Management, Vol. 6 No. 4, pp. 413-26.

Loh, T.C. and Koh, S.C.L. (2004), "Critical elements for a successful enterprise resource

planning implementation in small-and medium-sized enterprises", International Journal of

Production Research, Vol. 42 No. 17, pp. 3433-55.

Lu, C.-C. (2006), “Growth strategies and merger patterns among small and medium-sized

enterprises: an empirical study”, International Journal of Management, Vol. 23 No. 3, pp.

529-47.

Mabert, V.A.; Soni, A. and Venkataramanan, M.A. (2000), “Enterprise resource planning survey

of U.S. manufacturing firms”, Production and Inventory Management Journal, Vol. 41 No.

2, pp. 52-8.

Mabert, V.A.; Soni, A. and Venkataramanan, M.A. (2003a), “The impact of organization size on

enterprise resource planning (ERP) implementations in the US manufacturing sector”,

Omega, Vol. 31 No. 3, pp. 235-46.

Mabert, V.A.; Soni, A. and Venkataramanan, M.A. (2003b), “Enterprise resource planning:

managing the implementation process”, European Journal of Operational Research, Vol.

146 No. 2, pp. 302-14.

Mandal, P. and Gunasekaran, A. (2003), “Issues in implementing ERP: a case study”, European

Journal of Operational Research, Vol. 146 No. 2, pp. 274-83.

37
Markus, M.L.; Axline, S.; Petrie, D. and Tanis, C. (2000a), “Learning from adopters’ experiences

with ERP: problems encountered and success achieved”, Journal of Information Technology,

Vol. 15 No. 4, pp. 245-65.

Markus, M.L.; Tanis, C. and van Fenema, P.C. (2000b), “Multisite ERP implementations”,

Communications of the ACM , Vol. 43 No. 4, pp. 42-6.

McAdam, R. (2000), “Quality models in an SME context: a critical perspective using a grounded

approach”, International Journal of Quality and Reliability Management, Vol. 17 No. 3, pp.

305-23.

McAdam, R. (2002), “Large scale innovation – reengineering methodology in SMEs: positivistic

and phenomenological approaches”, International Small Business Journal, Vol. 20 No. 1, pp.

33-50.

McAfee, A. (2002), “The impact of enterprise technology adoption on operational performance:

an empirical investigation”, Production and Operations Management, Vol. 11 No. 1, pp. 33-

53.

McCartan-Quinn, D. and Carson, D. (2003), “Issues which impact upon marketing in the small

firm”, Small Business Economics, Vol. 21 No. 2, pp. 201-13.

Meredith, J. (1998), “Building operations management theory through case and field research”,

Journal of Operations Management, Vol. 16 No. 4, pp. 441-54.

Miles, M.B. and Huberman, A.M. (1994), Qualitative Data Analysis: An Expanded Sourcebook,

Sage, London.

38
Mintzberg, M.; Lampel, J.; Quinn, J.B. and Ghosal, S. (2003), The Strategy Process: Concepts

Contexts Cases, Upper Saddle River, NJ: Prentice Hall.

Morris, M.W.; Leung, K.; Ames, D. and Lickel, B. (1999). “Views from inside and outside:

integrating emic and etic insights about culture and justice judgment”, Academy of

Management Review, Vol. 24 No. 4, pp. 781-96.

Muscatello, J.R.; Small, M.H. and Chen, I.C. (2003), “Implementing enterprise resource planning

(ERP) systems in small and midsize manufacturing firms”, International Journal of

Operations and Production Management, Vol. 23 No. 8, pp. 850-71.

Nah, F.F.-H. and Delgado, S. (2006), “Critical success factors for enterprise resource planning

implementation and upgrade”, Journal of Computer Information Systems, Vol. 46 No. 5, pp.

99-113.

Nah, F.F.-H.; Zuckweiler, K.M. and Lau, J.L.-S. (2003), “ERP implementation: Chief

Information Officers’ perceptions of critical success factors”, International Journal of

Human-Computer Interaction, Vol. 16 No. 1, pp. 5-22.

Newman, M. and Zhao, Y. (2008), “The process of enterprise resource planning implementation

and business process re-engineering: tales from two Chinese small and medium-sized

enterprises”, Information Systems Journal, Vol. 18 No. 4, pp. 405-26.

Olhager, J. and Selldin, E. (2003), “Enterprise resource planning survey of Swedish

manufacturing firms”, European Journal of Operational Research, Vol. 146 No. 2, pp. 365-

73.

Patton, M.Q. (1987), How to Use Qualitative Methods in Evaluation, Sage, Beverly Hills, CA.

39
Pettigrew, A.M. (1990), “Longitudinal field research on change: theory and practice”,

Organization Science, Vol. 1 No. 3, pp. 267-92.

Poba-Nzaou, P., Raymond, L. and Fabi, B. (2008), “Adoption and risk of ERP systems in

manufacturing SMEs: a positivist case study”, Business Process Management Journal, Vol.

14 No. 4, pp. 530-50.

Quiescenti, M., Bruccoleri, M., La Commare, U., Noto La Diega, S. and Perrone, G. (2006),

“Business process-oriented design of enterprise resource planning (ERP) systems for small

and medium enterprises”, International Journal of Production Research, Vol. 44 No. 18/19,

pp. 3797-811.

Ragowsky, A.; Stern, M. and Adams, D.A. (2000), “Relating benefits from using IS to an

organization’s operating characteristics: interpreting results from two countries”, Journal of

Management Information Systems, Vol. 16 No. 4, pp. 175-94.

Rao, S.S. (2000), “Enterprise resource planning: business needs and technologies”, Industrial

Management and Data Systems, Vol. 100 No. 2, pp. 81-8.

Raymond, L. and Uwizeyemungu, S. (2007), "A profile of ERP adoption in manufacturing

SMEs", Journal of Enterprise Information Management, Vol. 20 No. 4, pp. 487-502.

Raymond, L.; Bergeron, F. and Rivard, S. (1998), “Determinants of business process

reengineering success in small and large enterprises: an empirical study in the Canadian

context”, Journal of Small Business Management, Vol. 36 No. 1, pp. 72-85.

Robey, D.; Ross, J.W. and Boudreau, M.-C. (2002), “Learning to implement enterprise systems:

an exploratory study of the dialectics of change”, Journal of Management Information

Systems, Vol. 19 No. 1, 17-46.

40
Ross, J. W. and Vitale, M., (2000). “The ERP revolution: Surviving versus thriving”, Information

Systems Frontiers, Vol. 2, No. 2, pp. 233-41.

Sapsford, R. and Jupp, V. (1996), Data Collection and Analysis, Sage, London.

Schniederjans, M.J. and Kim, G.C. (2003), “Implementing enterprise resource planning systems

with total quality control and business process reengineering: survey results”, International

Journal of Operations and Production Management, Vol. 23 No. 4, pp. 418-29.

Serafeimidis, V. and Smithson, S. (1999), “Rethinking the approaches to information systems

investment evaluation”, Logistics Information Management, Vol. 12 no. 1/2, pp. 94-107.

Shang, S. and Seddon, P.B. (2000), “A comprehensive framework for classifying the benefits of

ERP systems”, Proceedings of the Sixth Americas Conference on Information Systems, Long

Beach, pp. 1005-14.

Shanks, G.; Parr, A.; Hu, B.; Corbitt, B.; Thanasankit, T. and Seddon, P. (2000), “Differences in

critical success factors in ERP systems implementation in Australia and China: a cultural

analysis”, Proceedings of the Eighth European Conference on Information Systems, Vienna,

pp. 537-44.

Sheu, C.; Chae, B. and Yang, C.-L. (2004), “National differences and ERP implementation:

issues and challenges”, Omega, Vol. 32 No. 5, pp. 361-71.

Shin, I. (2006), "Adoption of enterprise application software and firm performance", Small

Business Economics, Vol. 26 No. 3, pp. 241-56.

Soh, C.; Kien, S.S. and Tay-Yap, J. (2000), “Cultural fits and misfits: is ERP a universal

solution?”, Communications of the ACM, Vol. 43 No. 4, pp. 47-51.

41
Soja, P. (2006), “Success factors in ERP systems implementations: lessons from practice”,

Journal of Enterprise Information Management, Vol. 19 No. 4, pp. 418-33.

Somers, T.M. and Nelson, K. (2001), “The impact of critical success factors across the stages of

enterprise resource planning implementations”, Proceedings of the 34th Hawaii International

Conference on Systems Sciences, Maui, 10 pp.

Stefanou, C.J. (2001), “A framework for the ex-ante evaluation of ERP software”, European

Journal of Information Systems, Vol. 10 No. 4, pp. 204-15.

Stratman, J.K. and Roth, A.V. (2002), “Enterprise resource planning (ERP) competence

constructs: two-stage multi-item scale development and validation”, Decision Sciences, Vol.

33 No. 4, pp. 601-28.

Strauss, A. and Corbin, J. (1990), Basics of Qualitative Research: Grounded Theory Procedures

and Techniques, Sage, Newbury Park, CA.

Stuart, I.; McCutcheon, D.; Handfield, R.; McLachlin, R. and Samson, D. (2002), “Effective case

research in operations management: a process perspective”, Journal of Operations

Management, Vol. 20 No. 5, pp. 419-33.

Sun, A.Y.T.; Yazdani, A. and Overend, J.D. (2005), “Achievement assessment for enterprise

resource planning (ERP) system implementations based on critical success factors (CSFs)”,

International Journal of Production Economics, Vol. 98 No. 2, pp. 189-203.

Umble, E.J.; Haft, R.R. and Umble, M.M. (2003), “Enterprise resource planning: implementation

procedures and critical success factors”, European Journal of Operational Research, Vol.

146 No. 2, pp. 241-57.

42
US Census Bureau (2004), “Statistics about business size (including small business) from the

U.S. Census Bureau”, available from http://www.census.gov/epcd/www/smallbus.html.

Accessed on June 22, 2008.

Van Everdingen, Y.; Van Hillegersberg, J. and Waarts, E. (2000), “ERP adoption by European

midsize companies”, Communications of the ACM, Vol. 43 No. 4, pp. 27-31.

Weber, R.P. (1990), Basic Content Analysis, Sage, Newbury Park, CA.

Weider, B.; Booth, P.; Matolcsy, Z.P. and Ossimitz, M.-L. (2006), “The impact of ERP systems

on firm and business performance”, Journal of Enterprise Information Management, Vol. 19

No. 1, pp. 13-29.

Willis, T.H.; Willis-Brown, A.H. and McMillan, A. (2001), “Cost containment strategies for ERP

system implementations”, Production and Inventory Management Journal, Vol. 42 No. 2, pp.

36-42.

Yin, R.K. (1994), Case Study Research: Design and Methods, Sage, Thousand Oaks, CA.

Zhang, L.; Lee, M.K.O.; Zhang, Z. and Banerjee, P. (2003), “Critical success factors of enterprise

resource planning systems implementation success in China”, Proceedings of 36th Hawaii

International Conference on System Sciences, Big Island, HI, 10 pp.

43
Table I. ERP critical success factors from the literature.
Pre- Post-
Implementation
Implemen. Implemen.
Source Method and Sample 11 2 3 4 5 6 7 8 9 10
Al-Mashari et al. (2003) Literature Review X X X X X X X X X
Ash and Burn (2003) 6 case studies (4 in large
X X X X X
companies)
Esteves-Souza and Pastor- Literature review
X X X X X X X
Collado (2000)
Finney and Corbett (2007) Literature review X X X X X X X X X
Gattiker (2002) Single case study X X X X X
Hong and Kim (2002) 34 manufacturing and
service firms (91% with X X
100+ staff)
Loh and Koh (2004) Literature review and
X X X X X X X X
interviews in 8 UK SMEs
Mabert et al. (2003b) 75 US firms (77% with
X X X
1000+ staff)
Mandal and Gunasekaran (2003) Case study of a large
X X X X X X X
organization
Muscatello et al. (2003) 4 case studies ($55M-$200M
X X X X X
annual revenue)
Nah and Delgado (2006) Case studies of two large
X X X X X X X X
organizations
Nah et al. (2003) Literature review X X X X X X
Soja (2006) 39 firms (>300 staff)
X X X X X X
29 firms (<300 staff)
2
Somers and Nelson (2001) 86 firms from various
X X X X X X X X
industries
Stratman and Roth (2002) 79 North American
X X X X X
manufacturers
Umble et al. (2003) Case study of large
X X X X X X X
organization
Zhang et al. (2003) 47 Chinese firms X X X X
1
CSFs: 1: Strategic visioning/planning; 2: organizational fit of ERP; 3: management support and involvement; 4: communication; 5: business
process reengineering; 6: project management; 7: change management; 8: training and education; 9: internal implementation team; 10:
performance evaluation. 2 Drawn from Fortune 500 firms and Directory of Top Computer Executives

44
Table II. Case study demographics.

Case 1 Case 2 Case 3 Case 4 Case 5

Industry Natural Plumbing

Chemicals Electronics Electronics
resources and heating
Company type Manufacturer/
Distributor Manufacturer Manufacturer Manufacturer
distributor
Company size (employees) Small Medium Medium Small Small

Formal strategic planning No Somewhat Yes No Yes

Organization levels 3 4-5 4-7 3 3

ERP software1 A A B A B

# of user licenses 10 40 100 17 12

1
“A” and “B” are used to disguise the actual software used

45
Table III. Success evaluation.

Benefits Realized Questionnaire Item Case 1 Case 2 Case 3 Case 4 Case 5

Operational “Cost reductions, cycle time Neutral Neutral Negative Neutral Positive
reductions, inventory reductions”
Administrative “Productivity improvements Positive Positive Negative Negative Positive
(administration)”
Cash Management “Cash management Positive Positive Neutral Neutral Positive
improvements”
Managerial Improved decision making Positive Positive Negative Negative Positive
enabled by access to information
IT Stability “Stability of system, business Neutral Positive Positive Positive Neutral
flexibility”
IT Costs “Reduction in IT costs” Neutral Negative Neutral Negative Negative

Strategic “Supporting business growth, Neutral Positive Neutral Positive Positive

cost leadership, customers
service, linkages to customers”
Organizational “Supporting organizational Positive Neutral Negative Neutral Positive
change, employee
empowerment, employee morale
and satisfaction, business
learning (integrating the
organization)”
Project Cost % of annual revenue 0.5% 0.4% 2.9% 3.0% 1.5%
(adjustment) (Positive) (Positive) (Negative) (Negative) (Neutral)
Duration Years since live date 2.5 3.0 1.5 1.0 1.0
(adjustment) (Negative) (Negative) (Neutral) (Positive) (Positive)
Overall Assessment Very Very
Successful Successful Unsuccessful
Unsuccessful Successful

46
Table IV. Cross case analysis.
Successful Projects Unsuccessful Projects
Case 1 Case 2 Case 5 Case 3 Case 4
Operational process discipline
Adherence and consistency Yes Yes Yes No Somewhat
Small internal team
Number of project team members <5 <5 <5 15-20 5-10
Team interaction with other staff Frequent Frequent Frequent Limited Limited
Project management capabilities
Level of formal documentation Medium High High Medium Low
Project leader Consultant Consultant Consultant Staff Staff
External end user training
Source of end user training External External External Internal Internal
Management support
Financial support provided Yes Yes Yes Yes No
Staff motivated towards project Somewhat Yes Yes No Somewhat
Reduction in functional duties Yes Yes Yes Somewhat No
Qualified consultant
Soft skills High High High Medium Low
Business understanding High High Medium Low Medium
Software knowledge High Medium Medium Medium Low

47
Table V. Critical success factors.
Factor Rationale
Operational process Inconsistent operational processes conflict with the procedural rigidity of ERP.
discipline
Small internal team A team of less than five inherently interacts with end users, reaches consensus quickly, creates a sense of
project ownership, and reduces administration and coordination costs.
Project management Internal project leaders are frequently distracted by regular tasks, limiting their time to prepare critical
capabilities project documentation.
External end user Internal project teams often lack time and skill to preparing and delivering effective training sessions.
training
Management support In the close-knit SME work environment, management leads by example. Encouraging employees positively
towards the project is just as important as providing sufficient resources.
Qualified consultant Internal project teams may depend heavily on external consultants, their technical expertise and soft skills.

48
Table VI. Distinctive factors.
Factor Rationale
Part-time dedication Internal project team members were generally expected to carry on regular responsibilities during the
implementation. Project success was achieved despite this practice.
Lack of formal Successful companies placed limited effort towards formal project communication, but no challenges
communication appeared to be directly associated with this decision.
Software modification Four of five companies chose to significantly modify their software, yet two of them had successful
projects.
Informal strategy Two of the three successful cases had no formal strategic planning or communication.

49