The University of Hanover

School of Economics and Management The Institute for Information Systems Research Prof. Dr. Michael H. Breitner Dipl. Oec. Lubov Lechtchinskaia

Theme Nr. 6

ERP Implementation: IT project management using the SAP Roadmap

Author: Matriculation Number:

Ekaterina Gracheva 2481380 Konradstrasse 2A 30826 Garbsen E-mail: ekaterina_gr@yahoo.de

Hanover, 20.05.2010

Contents

I.

Introduction

II.

Basic Definitions

II.1. Project and Enterprise Systems (ES) Project Management

II.2. Enterprise Resource Planning Systems SAP ERP

III.

ERP Implementation Using the SAP Roadmap

III.1. ASAP

III.2. ASAP Roadmap

III.3. ASAP Benefits and Problems

13

IV.

Critical Success Factors of the ERP Implementation 15

V.

Summary

25

Bibliography

27

I. Introduction
In the age of globalization and new technologies, competition between market players has become enormous. This has led to new dimensions such as information advantage and information technologies becoming an essential instrument for gaining this advantage. The way in which companies use information and how they make it work for them determines their success in the market. Business software applications enable the enterprises to optimize data processing and increase the efficiency of their business processes immensely. SAP standing for Systems, Applications, and Products in Data Processing is a world leader in the provision of business software.1 The range of SAP products extends from distinct solutions, which meet the needs of small businesses and mid-sized companies, to suite offerings for global multinational companies. SAP software supports enterprises around the world to improve customer relationships, enhance partner collaboration and create efficiencies across their supply chains and business operations.2 In addition to developing business applications software, SAP provides extensive training and consulting services, which support customers in implementing the SAP software. This work aims to analyse the implementation of the main SAP product the Enterprise Resource Planning (ERP) System. In order to speed up the ERP implementation projects, in 1996 SAP introduced the Accelerated SAP (ASAP) implementation methodology which aims to enable new customers to utilize the experience and expertise gleaned from thousands of ERP implementations worldwide.3 The SAP ERP implementation using the ASAP roadmap is the focus of the theoretical part of this work. Furthermore, the discussion part of the paper is dedicated to the analysis of the critical success factors (CSFs) of the ERP implementation. In order to realise this, a couple of papers were studied dealing with the experience of the ERP implementation. In accordance with these objectives the paper is structured as follows: First, the basic items used in this work are defined (Chapter II). Second, the ERP implementation using the ASAP

1 2

Arif, N. and Tauseef, S. (2008), p.20 SAP Unveils Road Map for Next Wave of SAP NetWeaver Innovations (2007), p.1 3 Esteves, J. and Pastor, J. (2001), p.1020

roadmap is described (Chapter III). The critical success factors of the ERP implementation are discussed in Chapter IV. Hereby the papers studying the experience of companies in implementation projects are analysed and the SAP ERP implementation framework with the roadmap phases and adequate critical success factors are elaborated. The conclusions follow at the end.

II. Basic Definitions

II.1. Project and Enterprise Systems (ES) Project Management

According to the DIN norm 69901, a project is an endeavour essentially characterized by the uniqueness of its conditions within the context of the whole. The conditions include the following: Agreed-upon goals Prescribed time Limited resources (personnel, material, financial and so on).4

A Guide to the Project Management defines the project as a temporary endeavour undertaken to create a unique product or service.5 This means that every project has definite beginning and end points and that the project outputs are different in some distinctive way from all other products or services. Besides uniqueness (novelty) the following possible characteristics of the project can be identified: complexity of scope, exposure to a high dynamic, requirements for interdisciplinary collaboration and creation of specific organisation.6 Project management is defined as totality of leadership skills organisational, technical and financial used to achieve the goals of the project. <...> project management involves the direct, cross-departmental co-ordination of the planning, monitoring and decision-making processes for cross-departmental tasks.7 The management of the project can be understood as the application of knowledge, skills, tools, and techniques to project activities in order to meet the project requirements and to achieve the project goals. It includes processes such as:
4 5

Draeger, E. (2000), p. 1 A Guide to the Project Management Body of Knowledge (2000), p. 4 6 Draeger, E. (2000), p. 1 7 Draeger, E. (2000), p. 2

initiating, planning, executing, controlling and so on. The Guide to the Project Management Body of Knowledge provides a well-developed systematic overview of project management areas as Project Integration, Scope, Time, Cost, Quality, Human Resource, Communications, Risk and Project Procurement Management.8 Like in the case of traditional projects, the following three pillars are important for ES projects: functional requirements, costs, and deadlines. The organisation seeks more efficient, faster and cheaper production with more functional requirements. In addition to these three traditional elements, one other key pillar is essential for ES projects: How does the enterprise move from the as-is to the to-be? How is flexibility built into the processes to enable the organisation to manage the evolution from the current state to the desired state?9

II.2. Enterprise Resource Planning Systems; SAP ERP

Enterprise Resource Planning (ERP) Systems or Enterprise Systems are software systems for business management encompassing modules supporting functional areas such as planning, manufacturing, sales, marketing, distribution, accounting, financial, human resource management, project management, inventory management, service and maintenance, transportation and e-business.10 Kumar & Hillsgersberg (2000) defines ERP as configurable information systems packages that integrate information and information-based processes within and across functional areas in an organisation.11 So ERP is a sophisticated software package designed to run an organisations core business processes (like order entry, procurement, finance, manufacturing, warehousing, human resources, etc.) in order to support, automate and optimize them.12 Why do companies implement ERP? A good overview of the benefits of the Enterprise Resource Planning Systems is presented by Khan (2002). The typical benefits of an ERP system are summarized as follows:

8 9

A Guide to the Project Management Body of Knowledge (2000), pp. 7 - 8 Portougal, V. and Sundaram, D. (2006), p. 79 10 Fui-Hoon Nah, F. (2002), p.36 11 Kumar and Van Hillsgersberg (2000), p. 24 12 Khan, A. (2002), p.1

in the sphere of business ERP supports companies with global operations and accommodates rapidly changing business conditions; it improves the companys internal integration by integration company-wide data and information and enabling the better consolidation of team groups due to the availability of centralized data in one system;

ERP enables enterprises to standardize the business processes and implement the best business practices; it provides flexibility for changes within the company, for example, ERP allows the addition or upgrade of other system components or functionality due to open system architecture; any change can be realized for all locations/groups through a configuration change at one central point;

ERP provides some benefits also in the sphere of reporting and information access; it allows the availability and easy access to transaction flows and document history, standard reports and customized reports can be developed;

cost savings, inventory and personnel reduction, productivity improvements and order management improvements etc.13

SAP is the worlds largest business software company and is globally recognized as a worldclass Enterprise Resource Planning (ERP) solution. More than 75 000 customers in more than 120 countries run SAP applications worldwide.14 In 2008, SAP achieved more than 100 000 successful implementations worldwide with a customer base of more than 41 000. According to the ERP Market Sizing Report, SAP took first place among ERP vendors ranked by application revenue in the years 2005 and 2006 (Table 1). The 2010 ERP Vendor Analysis Report outlining the actual ERP selection and implementation from 1600 organisations around the world announced SAP as the most short-listed ERP solution.15 Until December 2003 the SAPs predecessor of the ERP system was SAP R/3. R stands for real-time and the number 3 relates to the three-tier client-server architecture including database layer, application layer and presentation layer.16 After the mySAP ERP 2004 solution the last version provided was SAP ERP 6.0. The application delivers the following solutions, which are described briefly below:
13 14

Khan, A. (2002), pp. 4-7 Gruber, S. (2008), p.4 15 Home Page of Panorama Consulting Group (version 17.04.2010): http://panorama-consulting.com/the-2010erp-vendor-analysis-results-are-in-and-the-winner-is/ 16 Arif, N. and Tauseef, S. (2008), p.20

SAP ERP Financials SAP ERP Human Capital Management SAP ERP Operations SAP ERP Corporate Services17

Table 1: ERP vendors ranked by application revenue, 2005200618

17 18

Dosch, T. (2007), p.7 Jacobson, S. Et al. (2007), p.5

The aim of the SAP ERP Financials is the meeting of the actual challenges in finance with the industry-leading financial management software. It enables the enterprises to address changing financial reporting standards, and optimize the control over cash flows and financial risks management.19 SAP ERP Financials consists of Financial Supply Chain Management, Financial Accounting, Managerial Accounting, and Corporate Governance.20 Financial and management accounting produces, e.g., the high-quality financial and managerial reports that meet the requirements of the international accounting standards with a company-wide control, the integration of financial information and the central tracking of financial data. Other features are, e.g., valuation and documentation of the financial data including all cost- and revenue-related reporting.21 The financial supply chain management (SAP FCSM) helps to analyse the customer credit worthiness, manage the customer credit risk exposure, reduce the average collection period and ensure the faster accumulation of delinquent payments.22 The Treasury Application provides a system of control over hedging transactions and allocating cash.23 SAP ERP Human Capital Management (SAP ERP HCM) enables enterprises to optimize their HR processes like attracting the right people, developing and leveraging their talents, combining their efforts with corporate objectives and achieving top performance. Talent Management, Workforce Analytics, Workforce Process Management and Deployment are a part of SAP ERP HCM.24 The SAP ERP Operations solution aims at the provision of the operational effectiveness in the main business areas like product development, manufacturing, procurement and sales. The optimization of the day-to-day operations in order to achieve cost reduction, maximization of profitability, improvement of customer service and increased earnings are the goals of this solution.
SAP home page (version 01.05.2010): ERP Software From SAP: http://www.sap.com/solutions/businesssuite/erp/index.epx 20 Sharma, S. (2009), p. 28 21 SAP home page (version 01.05.2010): Features & Functions of SAP ERP Financials: http://www.sap.com/solutions/businesssuite/erp/financials/featuresfunctions/fin_managerial_accounting/index.epx 22 SAP home page (version 01.05.2010): Features & Functions of SAP ERP Financials: http://www.sap.com/solutions/business-suite/erp/financials/featuresfunctions/fin_supply_chain_mgmt/index.epx 23 SAP home page (version 01.05.2010): Features & Functions of SAP ERP Financials: http://www.sap.com/solutions/business-suite/erp/financials/featuresfunctions/treasury_applications/index.epx 24 SAP home page (version 01.05.2010): ERP Software From SAP: http://www.sap.com/solutions/businesssuite/erp/index.epx
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The SAP ERP Corporate Services solution supports enterprises in the efficient management of enterprise assets, safety compliance, corporate travel and real estate. The latter helps to reduce costs arising from real estate development and property issues. SAP ERP Corporate Services provides support in project and portfolio management, environment, health and safety management.25

III.

ERP Implementation Using the SAP Roadmap

As mentioned in Chapter II the ES project management has to find a way to enable the organisation to manage the evolution from the current to the desired state. The successful ERP implementation is an ambitious goal even for the experienced project manager. The industries have looked for a solution that could ensure a quick and cost-effective ERP implementation and observable return on the ERP investment. SAP took note of this need and developed a standardized implementation methodology for project management the Accelerated SAP (ASAP).26

III.1. ASAP
ASAP is a structured implementation approach, the aim of which is to ensure the successful on-time delivery of the project by providing templates, methods, tools etc. that have been built based on the previous experience of thousands of successful SAP implementations.27 ASAP is SAPs total implementation solution; it optimizes time, quality, and effective resources in ERP implementations. This complete solution consists of four elements: 1. ASAP roadmap 2. Toolkit, which designates all the tools employed in ASAP

SAP home page (version 01.05.2010): ERP Software From SAP: http://www.sap.com/solutions/businesssuite/erp/index.epx 26 Miller, S.S. (1998), p.2 27 Arif, N. and Tauseef, S. (2008), p.21

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3. Service and support are further components of ASAP including consulting from the first planning stages through completion of the implementation and to education and support services like hotline, archiving etc. 4. Training including training strategies for the project team and end-user training, and train-the-trainers techniques for effective knowledge transfer from the project team.28

III.2. ASAP Roadmap

The ASAP roadmap gives a detailed algorithm for all implementation activities. It structures the implementation process into five phases and offers detailed project plans to assist the project team by implementing the ERP. The documentation stored at each level of the roadmap tree structure contains recommendations for ERP implementation and links to helpful tools and accelerators.29 The aim of the ASAP Roadmap is the detailed demonstration of the totality and coherence of the project. It designates exactly what must be realized in each phase.30 The ASAP roadmap addresses the following five phases and can be presented graphically: 1. Project preparation (15-20 days) 2. Business blueprint (25-40 days) 3. Realization (55-80 days) 4. Final preparation (35-55 days) 5. Go live and support (20-24 days)31

Figure 1: ASAP Roadmap32

28 29

Miller, S.S. (1998), pp.11-12 SAP home page (version 12.04.2010): http://help.sap.com/saphelp_47x200/helpdata/en/48/623972d55a11d2bbf700105a5e5b3c/content.htm 30 Miller, S.S. (1998), p.13 31 Brandt, H. (1999a), p. 23

Each phase is structured as follows: it consists of a group of work packages which are structured in activities. Each activity includes a group of tasks. Each task implies a definition, a set of procedures, results, deliverables and documentations.33 1. Project preparation is the initial phase of the project where planning and preparation work have to be done. Each project should have exact-defined objectives and a precisely developed plan for achieving it.34 During the project preparation phase the strategy for the ERP implementation should be determined, the project team has to be identified and mobilized, the project standards have to be defined, and the project work environment has to be set up.35 The technical project team has to determine the technical demands and select the database and hardware vendors.36 The further deliverables from the first phase should be: Confirmation of high-level scope: the identification of the modules, that needs to be implemented like Financials, Controlling, and Materials Management etc. Agreement on a technology plan through the key IT and functional stakeholders, i.e. the commitment about the SAP version etc. Project milestone dates Definition of the methodology These points should be presented in project charter. They are the overriding principles and guidelines for the project.37 2. Business blueprint The main objective of this stage is to document the business requirements for the implementation.38 The SAP ERP implementation project should formulate a clear conceptual design collecting current valid business requirements (so-called as-is), and conforming how the SAP solution will meet these requirements (called to-be). In order to achieve this, discussion meetings and workshops with the key stakeholders

32 33

http://www.sceis.sc.gov/images/roadmap.jpg Esteves, J. and Pastor, J. (2001), p.1020 34 Arif, N. and Tauseef, S. (2008), p.21 35 Rainer, E. (2005), p. 1 36 Hartwig, B. (1999b), p. 5 37 Arif, N. and Tauseef, S. (2008), pp.21-22 38 Gulledge, T. And Simon, G. (2005), p.716

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are needed. At the end of this phase the conceptual design must be formulated in a business blueprint document.39 The developing the blueprint document is accompanied with some further tasks: Capturing a list of reporting requirements; Listing of enhancements: approval of functionality that is not provided by standard SAP and will require custom development; Creation of a prototype system to show the functionality of the accepted solution; Development of date migration strategy from legacy system; Mobilization of technical, financial and human resources for training and change management etc.40 3. Realization The aim of this phase is to configure the ERP system. The output of this phase is the baseline system based on the agreed-upon business blueprint and configured to match the company structure 100 percent.41 The realization is the longest phase of the ERP implementation and also requires the completion of the following tasks: The organizational change management and internal communication strategy have to be implemented; Test scripts and performance of unit testing and integration must be developed; User training and documentation must be developed and provided User roles for access to the system have to be defined and configured; Field mapping and cleansing activities for data migration have to be detailed The cutover plan to control activities during the go-life period has to be developed.42 At the end of this phase, project management has to prove the status of deliverables for completeness and accuracy. In addition to this internal quality check an external, independent third party quality control should be organised.43
39 40

Arif, N. and Tauseef, S. (2008), p.23 Arif, N. and Tauseef, S. (2008), p.23 41 Gulledge, T. And Simon, G. (2005), p.716 42 Arif, N. and Tauseef, S. (2008), p.24

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4. Final Preparation (Cutover) The purpose of this phase is to complete the final preparation of the ERP system for going live. The Final Preparation phase focuses on the administrator and end-user training, the final system tests and the beginning of the data-load exercise. It can be considered a cutover period with the objective to transfer existing data, functions and users from an old to a new system. This phase includes the following deliverables: Any open issues like a report setting, training etc. must be solved; The training must be complete; The disaster recovery scenario has to be provided; The final sign-offs (go or no-go decision) have to be received.44 5. Go Live and Support In this the final phase of the implementation project. The newly implemented SAP ERP system has to be declared as live for day-to-day business usage.45 The data must be migrated from the legacy systems, the activation of the new system must occur and the post-implementation support has to be organized.46 Immediately after going live, the system is reviewed to ensure that the business environment is fully supported. This means validating the business processes and technical parameters, and interviewing end-users.47 Users have normally a lot of questions during the first few weeks. For this reason, the project team must establish the help-desk covering the calls and e-mails coming from the end-users according to the ongoing activities and problematic issues. The longterm release strategy has also to be defined at the end of this phase.48

Home Page of Enterprise Resource Planning Portal (version 12.04.2010): http://www.erpgenie.com/sap/asap/roadmap.htm 44 Arif, N. and Tauseef, S. (2008), p.24 45 Batni, B.R. (2008), p. 3 46 Rainer, E. (2005), p. 1 47 Gulledge, T. and Simon, G. (2005), p.717 48 Brandt, H. (1999b), p.7

43

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III.3. ASAP Benefits and Problems

The usage of the Accelerated SAP program by implementation of the ERP system has several benefits. First, quality, time and efficient resources utilization are optimized throughout the implementation. The programs five phases beginning with collecting and assessing the resources of the company and ending with the Go Live and supporting stage places you at a distinct advantage in terms of time, and organises the project so that everyone can work together as a cohesive unit.49 Second, it offers the standard approach to ERP implementation for partners and consultants so that you are assured of the quality and guaranteed implementation knowledge. The ASAP program was developed and tested at customer sites by SAP to ensure the faster returns on ERP investments. The SAP team examined the collective experiences of ERP implementations over many years so that ASAP methodology has been refined across a huge number of implementations. On the basis of this broad empirical data the successful accelerators in business processes were determined.50 Third, SAP has a professional services organization. It supports the Accelerated SAP program by providing its own consultants in order to assist customers before and during the preparation phase. They also assure that there is always an SAP manager available for customers and consultants during all five phases. The SAP consultants offer specialized SAP product knowledge and quality assurance for successive implementations. The result is that the majority of Accelerated SAP customers are in a position where they can evaluate potential professional service providers to enhance their internal capabilities and the support that the SAP consultants offer.51 In order to support the initiation of the Accelerated SAP, SAP provides so called spring training classes for partners giving detailed information about people, tools, and processes that make up this program. The training classes about the ASAP techniques are results in partner certification. SAP certifies implementation partners in order to provide the effective utilization of the Accelerated SAP.52
49 50

Miller, S.S. (1998), p.202 Miller, S.S. (1998), pp.202-203 51 Miller, S.S. (1998), p. 213 52 Miller, S.S. (1998), p.214

13

Gulledge, T. and Simon, G. (2005) describe the SAP implementation methodology, and clarify the problems arising from using ASAP. The standardized character of ASAP has a disadvantage for companies with unique and unusual business processes. In case of one-of-akind requirements, e.g., DoD Funs Management or Moving Average Cost calculations, the ASAP methodology can lead to suboptimal results of the implementation project and inefficient business process configurations.53

53

Gulledge, T. And Simon, G. (2005), p.718

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IV.

Critical Success Factors of the ERP Implementation

As we have seen ASAP was developed as so-called Rapid Implementation Methodology to avoid the excessive implementation cycle times and cost overruns.54 However, the success of this methodology is still disputed. On the one hand, there are a lot of examples described in the modern literature showing that many companies had improved their productivity and organisational culture, optimized their human resource management and minimized costs through a successful ERP implementation. On the other hand, there are also many enterprises which underestimated the risks in ERP projects and failed in its implementation. The question we are interested in is which factors can affect the success of the ERP implementation project and its particular roadmap phases presented above from an empirical point of view. To find an answer, papers dedicated to the identification of the critical success factors of the ERP implementation and their relevance for the diverse phases of the SAP roadmap were analysed. In order to show the results systematically the table of ASAP roadmap phases and adequate CSFs is elaborated (Table 3). The first critical success factor we would like to point out is the optimal selection of the project leader and project team members. As mentioned above in the first ASAP stage the project team has to be put together. Within this step a number of important factors can affect the success of the ERP implementation. M. Al-Mashari, et al. (2006) refer to individual ability of each project team member to take on the management tasks with high motivation, an open mind and professionalism as important elements of the ERP implementation project. The successful execution of people-oriented and work-oriented leadership tasks is needed. The first tasks group aims at getting people in a team to communicate with each other to manage conflicts and supply positive and corrective feedback. The second tasks group deals with monitoring and setting goals and providing any needed recourses.55 The optimal project team must consist of a wide range of various talents with flexible and creative management styles. Esteves, J. and Pastor, J. (2001) called this the adequate project

54 55

Gulledge and Simon (2005), p.716 Al-Mashari, M. et al (2006), pp.173-174

15

team composition56. The following is a suggested list of ideal criteria for the selection of the project team members: Some persons who know the process inside-out and some persons who do not know the process at all; Some customers, if possible; One or two technology gurus; Some team members representing impacted organisations; And each person your best and brightest, passionate and committed.57

The project team composition is more relevant in the first phase of the roadmap, which is why this factor is placed in Table 3 accordingly in the first line of the project preparation and in the column the project management. But it must be emphasised that the project team can be restructured along the implementation phases to meet the implementation needs. W.-H. Tsai et al. (2005) analyse the correlation between the ERP project failure and six critical factors like time frame and project management problems, technology planning problems, training and learning problems, system integration and testing problems, leadership problems, and change management problems. The study was conducted with a sample of 657 enterprises in Taiwan. About 60.7 percent of the responses belong to the manufacturing sector, and 39.3 percent fall in the service sector. The failure reasons of the ERP implementation projects were examined on the basis of the questionnaire answered by top managers, project managers, key project members and end users of the responses group. The study results show that the problems with the ERP system implementation are more about people than about process and technology (Table 2).58 As Table 2 shows, the three common types of critical factors were statistically confirmed: time frame and project management problems, training and learning problems, and change management problems. The first group includes the fact that many implementation projects are late or delayed. The reasons are poor schedule estimates and uncertainty about the time frame of the ERP implementation. Many implementation projects exceed the planned budget

56 57

Esteves, J. and Pastor, J. (2001), p.1020 Al-Mashari, M. et al. (2006), p.174 58 Tsai, W.-H. et al. (2005), pp. 232-233

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because of poor project management or poor scope identification.59 Both contents belong to the project preparation phase Table 3.

Table 2: Descriptive statistics, correlations and reliability60 Training and learning problems are identified in the study of W.-H. Tsai et al. (2005) as statistically the next most common reasons cited for ERP implementation failure. They refer to the lack of user training. End users will become frustrated if they have to use the system without an exact knowledge and understanding of the various business processes behind the ERP applications.61 As we know, SAP provides an effective training programme for the end users and is an objective of stage 4 of the roadmap. However, in the previous phases the project-team training and the preparation of the end-user training have to be organised. The third group of problems empirically identified in the study mentioned above was the change management. The ERP implementation leads to structural, organisational and personnel changes in companies. The provision of the high professional change management is a key element in the successful on-time delivery of the project. The detailed description of the change management and its role in the ERP implementation project can be found also by

59 60

Tsai, W.-H. et al. (2005), p. 233 Tsai, W.-H. et al. (2005), p. 233 61 Tsai, W.-H. et al. (2005), p. 233

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M. Al-Mashari et al. (2006). The change management includes the following four critical factors: 1. 2. 3. 4. Communication Sponsor involvement Resource and training Personal Management.62

The first step of the change management is the understanding of the gap between advocates of change and those who resist it. In order to overcome this problem, the top management and project leader should learn who will be affected by the change and also how the change will be allowed and brought forward by those affected, through communication with them. The personal management is responsible for the communication on the level of the individual members: the major task here is to send a clear message about why the company needs change and what the company and individual benefits from this change are.63 W.-H. Tsai et al. (2005) also indicate the lack of communication as one main reason for ERP implementation failure. Communication should not occur only within the small group of project team members. Frequent interlocking discussions between different functional teams should also be scheduled. <...> additionally, communication should include feedback from the end users during the design phase.64 Top managements commitment and leadership make real the sponsors involvement to have a significant impact on the success of the change through the ERP implementation. The role of the top management within the project is to make the change policy understandable and attractive and to provide an open discussion environment to create the best way of organisational change. The visible commitment of the top management in the ERP implementation project, the top management training for change and communication with stakeholders are recommended as a good way to advocate the change process in the company. Some possible mistakes the top management can make in this context are not having direct involvement in the project, sending inconsistent signals, not communicating enough, changing priorities too soon, not understanding the importance of the change management in a company and hence not adequately providing the needed resources.65
62 63

Al-Mashari, M. et al. (2006), p.175 Al-Mashari, M. et al. (2006), pp.175,176 64 Tsai, W.-H. et al. (2005), p. 226 65 Al-Mashari, M. et al. (2006), p.175

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Also some other authors determine the sustained management support, in other words the top management buy in66 as an important critical factor for the success of the ERP implementation. The Unified Critical Success Factors Model for SAP Implementations of Esteves, J. and Pastor, J. (2001) can be mentioned as an example. In this study the relevance of this factor for the beginning and the end of the implementation project is emphasised: The reason is that at the beginning senior management should help in the rollout of the project. At the end, there is the need to encourage the system usage and help in the commitment of user involvement.67 Another factor affecting the success of the ERP implementation is the human resources of the company, which means the number, ability and skills of the members. Training and recruitment policy should follow the organisation change concept. The ERP implementation is a knowledge-intensive process and has to be accompanied with the needed knowledge transfer to the employees.68 It is evident that the human recourse training and know-how transfer have to be provided in particular in the beginning of the implementation project while the personal management, communication and sponsor involvement are important within the whole project duration. However Esteves, J. and Pastor, J. (2001) especially emphasised that the strong communication inwards and outwards more relevant in the first two roadmap phases because of a strong need for communication between senior management and the project team to define the project plan and scope, and in the final phase where the strong communication with the whole organisation is required in order to start the go live & support of the SAP system.69 These three elements are ordered accordingly in the mentioned roadmap phases and areas management and human resources (Table 3). Two further case studies analysing the factors which facilitate or inhibit the success of ERP projects are provided by Motwani, J. et al. (2002). Data was collected by interviewing members of the two organisations and by studying their achieved records. One company had a positive ERP implementation experience; the other a negative one. The first company is
66

Home page The Spot 4 SAP (version 13.04.2010): http://www.thespot4sap.com/Articles/Critical_Success_Factors.asp 67 Esteves, J. and Pastor, J. (2001), p.1020 68 Al-Mashari, M. et al. (2006), p.176 69 Esteves, J. and Pastor, J. (2001), p.1023

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working in the pharmaceutical industry; the second in the footwear industry. The data was collected by studying archival documents and conducting interviews at various levels of the enterprises. The importance of the CSFs presented in Figure 3 below was examined. Similar to studies of W.-H. Tsai et al. (2005) and M. Al-Mashari, et al. (2006) the role of the effective provided change and process management as two essential parts of the ERP Implementation management is emphasized here. However, contrary to both authors, Motwani, J. et al. (2002) point out the role of information technology (IT) in the success of the ERP implementation, especially regarding so-called IT leveragability. Enterprises have to ensure that users and all functional areas are considered in the systems development process. In order to achieve this, the business analyst group can be formed and given access to the ERP virtual screens in order to provide additional feedback to the ERP experts.70 The company that was successful in the ERP implementation project involved such a group in the pilot testing of the system. In the dry ran the team entered orders and tracked them as they were downloaded to the warehouse, and included in financial reports and transactions. The successful response company started this process as soon as the ERP crew had set up the system and kept it going until two months before the go-live date. IT leveragability is placed in Table 3 accordingly. The next CSF determined by Motwani, J. et al. (2002) differing him from the previous authors is the strategic initiatives, which take central place in the critical success factors system (Figure 2) and include a number of elements. Strategy-led proactive stimuli and formulation scope like, e.g., articulation and maintenance of the strategy of the revolutionary change from the beginning of the implementation project belong to this field.71 Esteves, J. and Pastor, J. (2001) share this view and emphasise the importance of the formulation scope for the project preparation stage because within this time frame the project managers have to define the scope and for the last two phases of the ASAP road map because the scope is usually revised and changed.72

70 71

Motwani, J. et al. (2002), p.92 Motwani, J. et al. (2002), p.88 72 Esteves, J. and Pastor, J. (2001), p.1023

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Figure 3: ERP implementation management73 Also the top management style in the decision-making process indicates the significant difference between the two response companies. Motwani, J. et al. (2002) found that the autocratic managerial style with top management mandating initiative without taking into consideration the majority sentiment of the company74 was evident in the company which failed in the ERP implementation. The interview with one employee of this company describes the problem well: We <...> tried to prepare ourselves for the implementation in every means possible. Thousands of hours of training classes were completed and selected individuals were polled for their opinion of readiness for the go-live date. However, upper management ultimately made the decision to throw the ON switch before the employees believed in or understood the software. The result was extremely costly, not only in dollars, but also in lost customers and customer service. Many employees wondered why the switch was ever made from the

73 74

Motwani, J. et al. (2002), p.85 Motwani, J. et al. (2002), p.88

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legacy AS/400 system to the ERP. Employees were disturbed and frightened by the new and complicated ERP system.75 Contrary to the so-called autocratic managerial style, the team approach was preferred and realized at the second company. This was achieved through corporate-level initiative and significantly supported the implementation project: The staffing of the project was the first challenge at hand. A strategic thinking team was assembled to assess the benefits and drawbacks of the ERP software. The crew attended seminars and spent countless hours discussing alternative systems. At least one representative from each function of the business was included in the group and at least one individual from each division. The group decided to implement the ERP in only the marketing and finance functions of the business. Only the basics of the ERP were implemented. The idea was to introduce the system, stabilize the system, and build upon the foundations to optimize the system.76 The next CSF empirically defined as the factor affecting the success of the ERP implementation is cultural readiness.77 This refers to the human resources of the company and, according to the ideas of W.-H. Tsai et al. (2005) and M. Al-Mashari, et al. (2006), stands alongside sponsor involvement, knowledge transfer and communication as important elements which prepare the whole company at the HR level for the harmonic adoption of the ERP system. Further CSFs defined in the study by Motwani, J. et al. (2002) like knowledge sharing, feedback loops and learning capacity were found by both authors mentioned above and are shown in Table 3 (s. below). In addition, the importance of the process management practice is emphasised. The successful process management includes the use of the process measurement in the form of, e.g., process metrics, process information capture, improved feedback loops and process audit.78 Esteves, J. and Pastor, J. (2001) point out the so-called preventive troubleshooting and its relevance for the final phases, especially in the fourth phase where issues can arise while the system is being tested.79 Last but not least the technological perspective studied in the Unified Critical Success Factors Model for SAP Implementations of Esteves, J. and Pastor, J. (2001) have to be integrated in
75 76

Motwani, J. et al. (2002), pp.89-90 Motwani, J. et al. (2002), p.90 77 Motwani, J. et al. (2002), p.92 78 Motwani, J. et al. (2002), pp.86, 92 79 Esteves, J. and Pastor, J. (2001), p.1024

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the implementation overview shown in Table 3. Within the critical success factors in this context the obvious elements like the adequate ERP version and adequate software configuration have to be observed. The adequate ERP version is equally relevant for all the phases of the roadmap. From the beginning until the end of the project, SAP advocates the upgrade and adoption of new SAP releases. The adequate software configuration is a case of the final preparation phase of the roadmap; it should follow the business requirements defined in the previous phase.80 The adequate legacy system knowledge is less important at the first stage of the implementation project because it aims at the preparation of the ERP implementation. But in the following roadmap phases the knowledge of the legacy system plays an important role in minimizing the effort of configuration and supporting the migration of data and development of interfaces.81 We put this last element in the implementation overview shown in Table 3 and proceed to the summary part of this paper.

80 81

Esteves, J. and Pastor, J. (2001), p.1024 Esteves, J. and Pastor, J. (2001), p.1024

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Table 3: Summary Overview of the ERP implementation project: ASAP Roadmap, Phases and Critical Success Factors
ASAP Roadmap: 5 phases The main goal of the phase Key Deliverables of the Phase Strategy M.J. Initial planning and preparation for an ERP implementation project. Identification of the needed modules. Identification of the objectives, scope and priorities of the project. Project Charter, Project Plan, Scope, Project Team Organisation, Standards, Project Methodology & Procedures. Project milestone dates.
*

Technology M.J., E.P.

*

Critical Success Factors Management M.J., A.M., T.W.H., E.P., * Project Management Change Management M.J., A.M., E.P.* T.W.H., E.P. * Personal management, communication, sponsor involvement. Strong communication inwards and outwards. The optimal selection of the project leader and project team. Time frame, exact schedule and budget estimates, sustained top management support. Process measurement, process metrics, process information capture.

Human Resource M.J., A.M., T.W.H, E.P. * Motivation, individual abilities, talents and skills. Project-team training, knowledge transfer. Learning capacity. Learning capacity.

1. Project preparation

2. Business blueprint

Documentation of the business requirements for the ERP implementation; development of the clear conceptual design. System configuration, performance of the unit and integration testing. Data mappings and data requirements are finalized for migration.

3. Realization

4. Final preparation

Administrator and end-user training, the final system tests, the data load exercise. Transfer existing data, functions and users from an old to a new system. Migration of the legacy data to SAP, activation of the new system. The organisation of the post-implementation support.

Business Blueprint. List of reporting requirements, development of date migration strategy from legacy system, mobilization of resources. Baseline system, organizational implementation of the change management and internal communication strategy. The definition of the user roles for access to the system. The cutover plan to control activities. Solve any open issues like a report setting; the training is complete; the disaster recovery scenario is provided; the final sign-offs are received. The system is reviewed to ensure that the business environment is fully supported.

Strategic initiatives: stimuli, formulation scope, decision making, strategy-led. Team approach

IT leveragability, adequate ERP version.

Team approach

Adequate legacy system knowledge IT leveragability, adequate ERP version. Adequate legacy system knowledge IT leveragability, adequate ERP version.

Team approach. Formulation scope. Team approach. Formulation scope.

5. Go live and support

Adequate software configuration, IT leveragability, adequate ERP version, legacy system knowledge. IT leveragability, adequate ERP version.

The successful execution of peopleoriented and workoriented leadership tasks Feedback loops, process audit. Preventive troubleshooting.

Strong communication inwards and outwards. Personal management, communication, sponsor involvement. Personal management, communication, sponsor involvement.

Learning capacity.

Personal management, communication, sponsor involvement.

End users training Learning capacity.

Sustained top management support.

Personal management, communication, sponsor involvement.

Learning capacity.

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V. Summary
This work analysed the ASAP methodology of the ERP implementations projects. In the focus of the theoretical part is the presentation of the ASAP roadmap, its pros and its cons. The empirical part discussed the factors that can affect the success of the SAP ERP implementation. The number of critical success factors is identified and classified according to their relevance to the diverse phases of the ASAP roadmap.

As we have seen, Enterprise Resource Planning (ERP) is characterised as a commercial software package providing an integration of information flow through a company and combining diverse sources of information into a single database.82 Enterprises exist today in conditions of globally intensifying competition and increasingly selective customers. They have to look for ways to achieve better business performance and secure competitive advantage through effective management of their resources and business processes.83 SAP is a worldwide-leading producer of the business software package ERP and the structured implementation methodology the ASAP roadmap for the successful on-time delivery of an implementation project. The presence of the SAP ERP as a market leader is realised not least through the provision of this implementation route.84 The five phases of the SAP roadmap described below represent the detailed algorithm for all implementation activities. Each phase consists of a group of work packages; each activity includes a group of tasks, and each task implies a definition, a detailed set of procedures, results and deliverables. The main advantage of this implementation methodology is the fact that it has been refined according to the successful experiences of thousands of previous SAP implementations and can thus guarantee the quality, time and efficient recourses utilization throughout the implementation. The problem of the SAP roadmap methodology arises more from the standardized character of the ASAP in companies with unique business processes. In case of one-of-a-kind business requirements the ASAP methodology can lead to non-optimal results.

82 83

Fui-Hoon Nah, F. (2002) p. 37 Tsai, W-H. et al. (2005), p. 220 84 Arif, N. and Tauseef, S. (2008), p.20

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Empirical data about the numerous ERP implementation projects shows that a standardized implementation in the form of ASAP is often used. However, the success of this methodology is still disputed. One possible explanation of the failure in the ERP implementation could be so-called critical success factors (CSFs), which are inherent in the technological perspective, culture, management or human resource characteristics of each company. Summing up, there are four key issues needed to be kept in mind in SAP ERP implementation in the context of CSFs: issues that have an impact on people (Human Resources), issues that have an impact on processes within the company (Project and Change Management), and issues of technological and strategic context. Each type issue has its own specification for each phase of the roadmap. According to the empirical evidence CSFs do not have the same importance along the diverse phases of an SAP implementation project.85 Thus, the table systemising a distribution of the CSFs along the SAP project was elaborated. Their respective mapping to the five roadmap phases is presented in Table 3. According to the empirical evidence, not taking these CSFs into account explains the possible failures in the ERP implementation project. Concluding, it can be foreseen that advantages and disadvantages of the SAP ERP system and its implementation possibilities will impact its further blossoming in already-entered markets in the world economy and its penetration of new ones. Today the vision of SAP is for all companies of all sizes to see clearly, think clearly, and act clearly so that they can close the gap between strategy and execution and become best-run businesses.86

85 86

Esteves, J. and Pastor, J. (2001), p.1019 SAP home page (version 13.04.2010): http://www.sap.com/about/vision/index.epx

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