Structural modeling and analysis of barriers to ERP implementation

Enterprise Resource Planning (ERP) is a software package that enables organizations to manage all business processes from an integrated database. ERP software benefits organizations in areas such as cost advantage, effective inventory management, optimum workforce planning, efficient information flow, reporting, and customer relationship management. If we look at the historical development of ERP software; starting from 1960s, Metarial Requirements Planning (MRP) was used. Later sales andcapacity planning, and scheduling became more important. Therefore from the 1970s onwards, Manufacturing Resource Planning (MRP II) was used. Between 1980 and 1990, ERP (Enterprise Resource Planning) systems were born with the addition of DRP (Distributed Resource Planning) and Computer Integrated Manufacturing (CIM) concepts. During the Enterprise Resources Planning software implementation many barriers occurs that effect the success of implementation. These barriers which decreases the success of ERP software implementation process are discussed at this study. The study focused on a small and medium sized enterprises (SME) in Turkey as a case study. Interpretive Structure Modeling and Matrice d'Impacts Croisés Multiplication Appliquee a un Classement/Cross Impact Matrix Multiplication Applied to Classification analysis are both used to reveal the interrelationships between the barriers. The Interpretive Structure Modeling (ISM) analysis consists of node points representing system variables and links representing the directions of relations between variables. As a result of the ISM analysis, a graph showing the contextual relationships between system variables is obtained. Visual structures are constructed which can be interpreted from poorly defined or not systematically structured models. The MICMAC (Matrice d'Impacts Croisés Multiplication Appliquee a un Classement/Cross Impact Matrix Multiplication Applied to Classification) analysis is an analysis based on the influence and dependence levels obtained from the accessibility matrix obtained by converting the barriers encountered in ERP implementations into numerical values after identification of relations with each other. Due to MICMAC analysis, the final graph is divided into five sectors. The first of five sectors comprises the ınfluential variables which have high influential level and low dependence level. The second of five sectors comprises the relay variables which have high influential and dependence levels. The third of five sectors comprises the resultant variables which have low influential level and high dependence level. The fourth of five sectors comprises the excluded variables which have low influential and dependence levels. The fifth sector comprises the middle cluster variables which have average influential and dependence levels. The literature has been searched to determine the barriers. After the research many barriers were listed. A brain storming meeting has made to define eventual barriers which are related with the SME's in Turkey. A consultant, a user and two academicians attended the brainstorming meeting. Barriers this study pays attention on are E-1 Resistance to change, E-2 Cost of software, maintenance and consulting services, E-3 Difficulty in adapting the technical structure of software to business processes (flexibility), E-4 Inadequacy of end users, E-5 Inadequacy of corporate culture and structure, E-6 Adequate consulting quality, E-7 Ineffective project management activities (Consultant), E-8 Ineffective project management activities (User), E-9 Difficulty of transfering data from existing system to new system, E-10 Inadequate infrastructure, E-11 Top management support and E-12 Inadequate software development support. According to the obstacle formation sources described above, there are three groups in this work. Barriers caused by the user are the barriers that arise from the lack of structural, administrative, etc. of the user company. Software-derived barriers are the obstacles that arise from the shortcomings of the company that provides the ERP software. The barriers caused by the consulting services are that the ERP software adaptation, and end-use training services etc. After determining eventual barriers this study pays attention on, a questionnaire was created to define the relationships between the identified barriers and expert opinions were obtained. Questionnaires were answered by two consultants who work for consulting company, two users who work for SME in Turkey which in the process of implementing ERP software, a consultant who works for Software company. After determining the interrelations of the barriers, Interpretive structure modeling and MICMAC analysis are made. The both analysis results are shown on both graphs of YYM and MICMAC analysis with different color effects. According to coloring, backround colors shows the level of YYM analysis. For YYM results theese colors are used: pink backround for the fist level, blue backround for the second level and green backround for the third level. Similarly for MICMAC analysis results theese colors are used: red text color for first sector, orange text color for second sector, yellow text color for the third sector, blue text color for the fourth sector and green text color for the fifth sector. The barrier of E-1 Rresistance to change has the highest dependence level was also included in the upper levels in both ISM and MICMAC analysis results. The barriers which are E-4 Inadequacy of end users, E-5 Inadequacy of corporate culture and structure, E-8 Ineffective project management activities (User), E-7 Ineffective project management activities (Consultant) and E-10 Inadequate infrastructure barriers are at the fist level of ISM analysis. Theese barriers stands out in term of the level of dependency just after the barriers of E-1 Resistance to change and E-11 Top management support according to MICMAC analysis. The barriers which are E-2 Cost of software, maintenance and consulting services, E-3 Difficulty in adapting the technical structure of software to business processes (flexibility), E-6 Adequate consulting quality, E-9 Difficulty of transfering data from existing system to new system and E-12 Inadequate software development support are located at the second and third level of ISM analysis are also located close to each other at the MICMAC graph. Even the firm doesn't face some of theese barriers during ERP software implementation process, many of theese twelve barriers causes problems and effects the succee of ERP implementation project. According to the case study the general situation in the firm and the negativities experienced are similar to the problems presented in the study. This information can be interpreted in the light of Interpretative Structural Modeling and MICMAC analyzes giving similar results. Also the study shows the barriers in the system are influenced by each other and affect each other on different levels.