Human Risk Factors in Post-Implementation Phase of ERP in SMEs in India

L P Singh, Sarbjit Singh, N M Pereira

Department of Industrial & Production Engineering, Dr. B. R. Ambedkar National Institute of Technology,
Jalandhar, Punjab, India
Abstract--As Small and Medium Scale Enterprises (SMEs)
are getting more customer-focused and profit driven they are
adopting tools like Enterprise Resource Planning (ERP) systems
in order to automate and integrate all of a company's business
processes for the smooth functioning of the organization. Nonvalue adding business processes are removed and the
organizational structure is streamlined with the use of ERP
systems. The study reported in this paper aims to identify, assess
and suggest improvements to ERP post-implementations
shortcomings due to human related risk factors for a discrete
manufacturing unit in India. The organizational human-related
factors post implementation was analyzed by adopting in-depth
interview and questionnaire responses as the main method of
data collection. The findings identified that the success of ERP
systems is hindered by resistance of users to technology change.
The human factors found in the study were classified to be
psychological, behavioral, incomplete training and human
errors at the time of data entry. The study also indicates a
strong need for change in the training structure provided by
vendors in order to successfully implement the ERP system. In
contrast with technical risks and disregarding the deficient
business processes and business drawbacks, human-related risks
due to change management techniques applied are more crucial
to potential ERP failures and can have long term implications
for the success of ERP usage in manufacturing units.

I. INTRODUCTION
Man, material and machines are the three important
resources of any manufacturing organization. Managing these
resources is very important for the development and survival
of any organization. An efficient information flow is a unique
tool that will help the management to coordinate and utilize
these resources effectively. Information systems (IS) across
different functional units of an enterprise lead to dysfunction,
redundancy and waste. Hence the need of the hour for IS
integration led firms to adopt Enterprise Resource Planning
(ERP) systems, which is a tool developed and supplied by
more than 100 vendors and is perceived by various
organizations as a solution to their problems.
The initials ERP originated as an extension of material
requirements
planning
and
computer
integrated
manufacturing. It was introduced by research and analysis
firm Gartner in 1990. ERP systems now cover all core
functions of an enterprise, regardless of the organization's
business or charter. ERP systems are enterprise wide systems
that, because of their integration, automate all of a company's
business processes like resources, information and functions
of a business from shared data stores. An ERP system has a
service-oriented architecture with modular hardware and
software units or "services" that communicate on a local area
network. The modular design allows a business to add or

978-1-890843-21-0/10/$26.00 2010 IEEE

reconfigure modules while preserving data integrity in one

shared database that may be centralized or distributed. Data
dictionary, middleware and the repository are three distinct
features of ERP architecture that facilitates compatibility
between task and technology and co-ordinates marketing,
manufacturing, distribution and human resources tasks in the
ERP system [6]. The latest generations of ERP systems have
succeeded in developing a supply chain management
capability, which can address all the complexities and details
of most multi-layered supply chains and keep it under tight
control [26]. They have rapidly become the de facto industry
standard for replacement of legacy systems. These systems
can now be found in non-manufacturing businesses, nonprofit organizations and governments.
Initially, the developers focused on the large-scale
industries, which resulted in a product of very high cost that
cannot be afforded by small and medium enterprises (SMEs).
But as outsourcing is the order of the day, large industries
need to be fully integrated with outsourcing units, which are
generally small and medium enterprises. Hence, only
automation of information and decision-making activities of
only large enterprises cannot serve the requirement of these
information systems. Supply chain management, which is
gaining popularity throughout the world, demands complete
integration of all the players along the supply chain. These
issues, along with the tangible and intangible benefits of
information systems, have forced the SMEs to opt for some
form of information systems. Not able to justify the costs and
benefits of the present full-fledged ERP systems, the trimmed
versions of these packages are now available as an alternative
solution for SMEs. Even though these trimmed versions may
be cost-compatible but they offer incomplete/partial solutions
to SMEs. Hence, there is a need for finding a better
alternative to provide full-fledged information solutions
without sacrificing facilities, at suitable costs. Decision
making regarding factors like financial considerations, the
limited means of SMEs and managerial factors such as the
strategic orientation regarding technology and the exposure
of management is vested solely in the entrepreneur or the
owner-manager. The need to improve the performance of
ongoing operations, to integrate data and systems and to
avoid a competitive disadvantage are factors that determine
the investment made in seeking out information with a view
to an eventual ERP system adoption [25]. ERP systems for
the SME is like a large enterprise solution for small
businesses [46], and the challenge to SMEs confronting ERP
is to learn how to deploy the technology of large enterprises
without incurring their expenses [27].

Indian SMEs, the backbone of its economy, are today

faced with global competition making it imperative for them
to look for means to respond to the dynamic markets. Up to
mid 1990s, SMEs sector in India was characterized by limited
competition and a highly regulated business environment
resulting in limited focus on process efficiencies, centralized
control structures, highly formalized business settings and
lack of professional business practices [31]. SME sector
accounts for 40% of industrial production, 35% of the total
export and 80% of the employment in the industrial sector in
the country [12]. In the post liberalization and opening up of
the economy business era coupled with world trade
organization regime, ease in international trade barriers,
economic
liberalization,
globalization,
privatization,
disinvestments and deregulation have thrown several
challenges to the SMEs in India. Smaller product
development cycles, cut throat domestic and global
competition, economic downturns, rapidly changing customer
demands and volatile financial markets have all increased the
pressure on SMEs to adopt modern business practices and
strategic tools like ERP. Other external factors that play a
role in SMEs adopting ERP systems include pressure from
multinational corporation clients, peer pressure from other
SMEs and above all to gain a competitive advantage and
respond to the dynamic market scenario. 50% of new SMEs
that start each year cease to exist in the first 3 years of
business and only 40% survive beyond 10 years. The firms,
who have the ability to take risks and respond to the changing
circumstances, survive and grow. Those SMEs who have a
strong technological base, international business outlook,
competitive spirit and willingness to restructure themselves
shall withstand the present challenges and contribute to the
economy of India.
Recent years have seen an increased interest in postimplementation of ERP systems in the research field but they
still lack insight into human factors that are prevalent in the
system. These factors are the root cause of major setbacks
faced by SMEs in developing countries around the world.
This paper aims to fill this significant research gap by
presenting human factors/risks responsible for the failure of
ERP systems and the lack of utility of the functionalities
available in the ERP system. Reference [28]s model on risk
ontology is cited discussing the human risk factors as one of
the risks involved in post-implementation of ERP systems.
II. LITERATURE REVIEW
Reference [23], [34], [36], [40] and [41] state that ERP
systems are designed around a process view of the business,
and promise seamless integration of all information flowing
through a company. Top management support, effective
implementation team, organizational-wide commitment to the
system and the effective resolution of misalignments between
organizational needs and the ERP package functionality are
critical factors for the success of an ERP implementation
project. It is seen in the following literature review that

people are a major source of information gathering and

contribute extensively in ensuring the flow of information
across the various functional areas within an organization.
Since people are involved in this process there is a risk factor
that has to be considered due to unpredictable human nature.
A. Use of IS in SMEs
Information flow is the bloodline of any businessoperating unit irrespective of its size and operations and has
become one of the key measures for an organizations
survival. To operate small and medium enterprises (SMEs) in
extremely volatile and unpredictable business environment
and the availability of right kind of information at right time
has become a prerequisite for successful operations. With the
advent of relatively inexpensive computer hardware and the
availability of wide range of packaged software, many small
firms now have some experience of the effects of computerbased IS [20]. IS is an organized combination of people,
hardware, software, communication networks and data
resources that collects, transforms and disseminates
information within and among organizations.
Most manufacturing companies realize that a robust
management is the key to success in unpredictable markets
[22]. Majority of the SMEs acknowledge the importance of
IS in todays globalize business scenario, however these
SMEs mindset of IS is limited to the extent of mode of
correspondence and internal communication within the
organization. The use of computers in SMEs is only limited
to top management and managerial/supervisory staff only
indicative that information technology (IT) in SMEs still
takes a backseat despite of the fact that use of computers is
continuously increasing in their operations [37]. SMEs are
under increasingly diverse and mounting pressures due to
more customized and sophisticated markets, changing
customer choice and global competition. In such a
competitive business scenario SMEs have to search for new
processes, new materials, new suppliers, new plant and
machinery, and new channels to deliver products and services
at competitive price [7]. Responsiveness, better customer
service, increase in turnover, better capacity utilization, edge
over other competitors, reduction in inventory, and improved
relations with supply chain partners are the major benefits
perceived by the SMEs by following the proper IS-related
practices in business operations.
B. SMEs and need for ERP
SMEs cover a wide spectrum of industries and as such are
important to developing economies. SMEs could create a
competitive advantage by being more responsive to change
through the use of ERP as a production planning and control
tool and could improve responsiveness and agility to change,
but not to uncertainty. ERP can create a competitive
advantage in meeting delivery performance in SMEs by
holistically managing the underlying causes of uncertainties
that significantly affect product late delivery in their specific
manufacturing environments [17]. Each SME reinvents the

wheel since little attention is initially given to business

processes and made sure they are followed [44]. ERP
provides a repeatable, scalable framework where best
business practices are made available to the business to work
with. Far from having to modify the infrastructure, the SMEs
will benefit greatly by adopting such business practices [38].
Accounting software like Tally is extensively used by most
SMEs in India. It is an off the shelf package solely catering to
the needs of the functions of accounting. It is very low on
user customization, does not have planning or costing
capabilities and is not integrated with other areas like sales
and marketing, production, inventory management, etc..,
Reference [32] states the following categories to bring out
the need for ERP by SMEs:
Environmental Context
SMEs operating in a price-sensitive market
SMEs operating in a very dynamic sector or in a highgrowth market
Close logistical links between SMEs and their business
partners (partnership-network) would necessitate the
integration of information in the value chain
Membership or affiliation of SMEs in a network of
business
Technological context
SMEs confronted with the inefficiency, inflexibility and
disintegration of their legacy manufacturing information
systems
SMEs that have implemented and assimilated more
advanced and integrated manufacturing technologies and
applications such as CAD/CAM, FMS, and MRP-II
Organizational context
SMEs not having a very idiosyncratic production
processes
SMEs in a situation of strong human, technical, and
financial resources
Larger, more decentralized SMEs
Greater formalization
ERPs are designed to help manage organizational
resources in an integrated manner and this level of functional
integration has the following benefits [10]: reduced planning
cycle time, reduced manufacturing cycle time, reduced
inventory, reduced error in ordering, reduced requirements of
manpower, enables faster response to changing market
situations, better utilization of resources, increased customer
satisfaction, enables global outreach, etc.., On assessing the
extent to which on a post-implementation basis, they had
actually attained those benefits, it was evident that they were
not able to improve profitability, lower personnel, inventories
or system maintenance costs to a large extent but noted that
such costs would take time.

C. Implementation of ERP
ERP implementation involves a mix of business process
change which incorporates the best practices followed the
world over and software configuration to align the software
and the business process [15]. Internal and external
operations of an organization change both structurally and
culturally on its implementation. An organization can opt for
a plain vanilla version of ERP wherein the organization has to
reengineer the business process to fit the functionality of the
ERP system or a customized ERP where the ERP vendors
alter the ERP package to fit the business process of an
organization. ERP systems successful implementation and
use are critical to organizational performance and survival
[19].
ERP is a project involving change management and not
merely an automation project, it is a business solution and not
an IT solution and over customization of the ERP system are
contributing factors to one-third failed ERP implementations
worldwide [39]. Numerous ERP implementations exceed
budget, lag behind projected schedule, and fail to match
expectations. 40% of implemented ERP systems perform to
only some of their full effectiveness [43] and 20 % are
scrapped as complete failures and 60-90 % of implemented
ERP systems are less effective than the expected [30]. 25 %
of the money invested in ERP is wasted [8]. FoxMeyer
Health Corp [45] and Dell Computers [2], [5], have failed in
ERP system implementation, Whirlpool [4], Hershey Foods
[9], [45], Boeing, Mobil Europe, Applied Materials and
Kelloggs [5], and Nestle [48] suffered from ineffective ERP
systems. However Eastman Kodak [42], Panasonic, HewlettPackard [51], and Cisco Systems [5] have reaped the
expected benefits after implementing ERP systems.
With the advent of globalization and the appearance of
new forms of organization based on networks of closely
cooperating firms, successfully implementation of ERP
systems will take on an increased significance for the
survival, growth, and competitiveness of many SMEs. Since
the effectiveness of the post-implementation ERP systems
have become a crucial indicator of e-business success, today
companies are concerned not with whether an ERP system is
needed, but rather with how to establish an effective ERP
system. The greatest complexity and difficulty in ERP
implementation lies in dealing with human beings including
all-levels of management and end-users throughout the
organization [49].
D. Post-implementation Success
The success of an information system depends on the
extent of user participation and involvement in system
development, the extent of business process and needs
assessment during the analysis stage of the systems
development process and the level of data integration
designed into the system [14], [24], and [50]. The factors that
influence the process of system development have a
significant effect on both organizational performance and
user perceptions about the system after its implementation

and continued use in an organization. The postimplementation stage in a systems life cycle encompasses a
number of activities, such as post-implementation review,
support and maintenance that are critical to the success of the
system [13]. Several pre-implementation beliefs may affect
number of attitudes [1], those attitudes then influence certain
executing behaviors, and some of which impact the
effectiveness of post-implementation ERP system.
Reference [24] states that ERP post implementation
success is determined by the extent to which an organization
carries out a planned set of review/evaluation activities on a
post-implementation basis which relate to the following five
dimensions: review of overall project scope and planning;
review of driving principles for project development;
evaluation of misfit resolution strategies; evaluation of
attained benefits; and evaluation of user and organizational
learning.
Reference [49] states the various human factors noticed
that lead to the effectiveness of the implementation is:
Compromise
Organizations
sometimes
must
compromise with users to completely install ERP systems.
However, the system stability decreases with changes in
business goals.
Interaction - The ERP system variability and customized
cost decrease with increasing BPR determination, interaction
with the ERP consultant reduces with increasing resistance to
change from end users, and engagement from end users
decrease with increasing number of changes to
implementation goals.
Knowledge - The resistance to ERP implementation from
end users increases with decreasing professional management
knowledge from MIS leaders. Executing the ERP
implementation is not a computer issue, but a people issue
nor is it an IT or IS project, but rather a business project.
Therefore, MIS leaders lack the sufficient management
training/background and also lack necessary understanding of
the needs of users and other organizational departments,
which can create difficulty in effective communication.
Leadership
Inadequate
implementation
approach/strategy is created by unsuitable ERP leaders,
implying that selecting the right executives can minimize the
possible failure to effectively implement ERP system and
maximize the effectiveness of the post-implementation ERP
systems.
Education - End-users across the organization must be
educated from the onset of ERP implementation. Although
education is a cornerstone of ERP implementation, the user
training is usually only emphasized and the courses are
centered on computer/system operation rather than on
understanding the ERP concept and spirit
Reference [3],[15],[16],[29] shows that the focus has
mostly been on the development of stage models that
describe a set of sequential activities useful for the planning
of future actions and not on the examination and
understanding of human factors that contribute to the process
itself.

E. Post-Implementation Risks
Reference [21] states that the market of postimplementation ERP service is rapidly growing and the postimplementation ERP may be is the direction of second wave
called post go-live stage [47]. Organizations inevitably
encounter a wide range of short-comings when using,
maintaining and enhancing their ERP systems in the postimplementation stage. These undesirable occurrences stated
below can turn the initial ERP success into a failure and may
lead to system and business collapses [28].
Operational risk may occur as operational staff use ERP
systems to perform daily business activities.
Analytical risk may occur as managers use ERP systems
to carry out analytical tasks like generating plans and
forecasts to predict and better manage the uncertain
future.
Organization-wide risk may have an impact on the entire
company when using and maintaining ERP systems in the
relation to various internal (e.g. system users) and external
factors (e.g. system vendor)
Technical risk may result in risk events that can hinder
the implemented ERP system to meet its intended
functions and performance requirements
ERP is doomed under the control of inadequate/wrong
persons because the chief executive officer (CEO)
commitment and involvement, professional management
background of management information system (MIS)
leaders, and top- and middle-management commitment and
involvement are three key triggers that are extremely
significant in triggering a series of activities via the
implementation process. However on a review of all the
literature pertaining to post-implementation risks a fairly
generalized view is seen. The human factors are always part
of the problem and are the major reasons for operational,
analytical, technical and organizational-wide risks.
Reference [28] states the various human factors
contributing to the post-implementation:
1) Psychological Characteristics
These are characteristics that work on the mind of the
individual in any organization. Psychological anxieties like
fear of loss of job, lack of confidence in the system, unwilling
to change and even de-motivation due to various factors can
be seen as a cause that affects the efficiency of peoples
work. The fear of loss of job can make the operational staff in
the shop floor, the main users of ERP, reluctant to use the
implemented ERP system significantly reducing the
companys operational efficiency. In the initial period when
the system was just go-lived these risk are expected to have a
high probability of occurrence. The ERP system brings in a
clear and disciplined approach to processes followed within
an organization. Be it in the field of manufacturing, finance
or even sales and marketing the inability of the system users
to maintain day-to-day records is attributed to the individual
behavior operating on the system. ERP requires day-to-day

work by the system users and its failure leads to

inconsistencies in the system. A constant inventory check has
to be maintained, work- schedules generated by the system
has to be followed, production details have to be kept up-todate, etc.., If there is lapse in the performance of the
operational staff it reflects in the system leading to the failure
of the use of the ERP system.
During the economic downturn a large number of
employees face uncertainty with their jobs hence the
accounting managers are unwilling to delegate their
responsibility onto others especially non-accounting staffs.
Non-accounting staffs are unwilling and incapable to take up
accounting responsibilities [28] since with the adoption of
ERP solutions, the accounting part of a company is no longer
distinguished from the operational one and the nonaccounting staff, e.g. sales and production staff, are now
asked to document and be responsible for their own costs,
expenditures and budgets, which were originally managed by
accountants and financial directors [35]. This may result in
conflicts
between accounting
and
non-accounting
departments, and even lead to resistance to use ERP system
in the firm. Additionally, non-accounting staff taking on
accounting duties may be ill-prepared to do so and therefore
produce unreliable data, leading to a lot of system utilization
errors. It often occurs that the system user is unsure about
their ability and when there appears to be a system error they
assume it to be due their own infirmities. Their reluctance to
report problems in the system for fear of management
accusing them of their faults leads to a great risk in the postimplementation phase of the ERP system.
2) Behavioral Characteristics
Reluctance to change often cause front-line managers to
refuse to use the ERP system. In response to demands posed
by the new global economy in conjunction with the
implementation of ERP systems, managers on the front lines,
where some say the real work is done [33] are assigned with
a broader set of responsibilities and tasks (e.g. budgeting,
planning,
forecasting,
quality
management
and
benchmarking, etc) than ever. The inability to accept change
often causes impediments to the success of the system. The
attitude of top managers will affect not only the flow of
funds and information to the IS project, but also how the
subordinates view the project [11]. Top managers do not
provide sufficient support to ERP post-implementation [28].
Conflicts and arguments regarding post-implementation may
arise between lower levels of management. A strong
leadership presence is needed during this chain management
post-implementation phase. Top managers also lack sufficient
experience of operational situations, operational expertise and
technical knowledge to make appropriate decisions on IT
solutions on their own. This leads to inappropriate ERP
maintenance or enhancement decisions and reduce motivation
of staff and in-house experts in the user company during postimplementation [28]. Ego can also cause the managers at
higher post not to delegate a share of their responsibility even

though it causes a lesser strain on their work load. They have

a false sense of their self-worth and use their position to
ensure job security and power over their subordinates.
3) Lack of sufficient and continuous training
Reference [28] defines in appendix A, OWR4.1, the lack
of sufficient and continuous training. ERP training is
extensively concentrated on the operational users but lacks
focus towards the top level of management. Top managers
take decisions to implement ERP as a change management
initiative but they still lack the technical know-how of the
functionalities that can assist them in their day-to-day
activities. Experience emerging from a number of casestudies reinforces that sufficient training should not only be
provided to staff who will use the system daily, but also to
managers who can then facilitate and better control the
changes taking place within the company[11]. Managers need
to be continuously trained as they are critical to the success of
the ERP systems application in the organization. Managers
should be adequately trained during the cycle of ERP
implementation in order to enable them to have sufficient
skill and knowledge to maximize their use of the system
when it was go-live [18]. The more functionality that the
managers are able to use in the system, the more extensive is
there report generating abilities.
However, the ERP system will be constantly upgraded
and improved during the system post-implementation stage.
In order to ensure that staff can use any newly installed
functions effectively, they should be provided with
continuous training. However, it is common knowledge that
staff and managers of many companies may not receive
sufficient and continuous ERP training, usually due to lack of
funds, resources and expert trainers. The occurrence of this
risk event may lead to significant resistance to the use of ERP
system in the company, as well as misunderstanding and use
of newly implemented features and facilities. Users are
uncomfortable to input or retrieve data from the system [28]
due to lack of training or even due to the performance of the
employee themselves. Since the ERP system acts as a check
point to rate the performance of the worker, they are
uncomfortable to input or retrieve data from the system. The
system records creates a log hence if there is error on part of
the worker in the system it can be easily detected.
4) Human mistakes
Reference [28] defines in appendix A, OR1.2, the human
mistakes that occur during data entry. Operational staff input
incorrect data into the ERP system which require extremely
high data accuracy to work effectively and efficiently, and
will in turn impact and may disturb the operation of the
whole company. This risk event may be caused by tiredness
or de-motivation or staff may even purposefully input
incorrect data into the system due to cheer frustration or in
order to gain, by fraud, illegitimate benefits and resources
from the company. The system contains inaccurate inventory
records which is one of the most important elements of

organizational data stored in ERP systems. Inventory records

stored in the ERP system may be mismatched with actual
stock levels leading to sales staff not able to inform
customers about crucial stock information and availability,
production staff unsure of production schedules and issue of
procurement orders and account staff may be misled in their
calculations of the actual value of current inventories,
procurement orders and production costs.
III. CASE BACKGROUND
This case study considers a medium scale manufacturing
unit in a southern state of India. The case company was
working over the last two decades with significant growth
business. Before the ERP implementation, its operational data
was mainly processed using traditional applications like
excel, tally spread sheets, which made it difficult for
employees to work efficiently. The company had created a
disintegrated IT infrastructure within the organization, which
made it extremely difficult for users to access useful business
data. With increasing manufacturing capacity, the case
company found that the system was quite slow and unable to
keep pace with the companys financial and business
requirements. The company realized the need for a

centralized business solution that could provide integrated

information and enable the organization to increase
operational efficiencies.
Before the implementation of ERP package there are
some pre-requisites that the manufacturing unit had to fulfill.
These included a seminar on the uses of ERP by the vendor
concerned with implementing the project, up gradation of
hardware and software systems in order to meet system
requirements, installing a new server to host the database of
ERP, training of personnel with regard to pre-implementation
phase, etc.., They also had to ensure records with respect to
inventory, book-keeping, journal entries, sales record, workin-progress, excise, sales-tax, etc.., had to be updated from
the organizations perspective. With the help of an ERP
consultant and a vendor, the company deployed an ERP
solution to streamline business processes and operations, and
manage inventory. The new solution offered employees a
user-friendly, easy to use interface. Employees can now
access real-time information, which helps them to better
manage business processes.The implementation was
completed in four months deploying the finance, sales,
purchase, manufacturing, subcontracting, and design modules
successfully. The product was customized to cater to the
companys specific needs.

TABLE 1, COMPARISONS BETWEEN THE EXPECTATIONS FROM ERP SYSTEM, POST ERP IMPLEMENTATION AND BEFORE ERP SYSTEM
IMPLEMENTATION IN THE MANUFACTURING ORGANIZATION
Before ERP
Expectations from ERP system
Post ERP Implementation
1.
Information access takes time
1. Real time access of information
1.
Real time access of information
2.
Use of Tally for accounts and Microsoft
2.
Use of ERP solution only
2.
Simultaneous usage of both old and new ERP
Excel sheets to store data
system
3.
Inaccurate data due to error in entry
3.
Accurate Data
3. Accurate Data as system offers checks
4.
Redundant data
4.
Reduced redundant data
4. Reduced redundant data
5.
Double and triple entry of data
5.
Single entry system into ERP
5.
Increased number of entries due to
solution
simultaneous following of two systems
6.
Excel sheets used as storage of data
6.
Data stored in database on a
6.
Data stored in database on a separate secured
separate secured server
server
7.
No record of real time inventory
7. Real time access of inventory
7.
Only partial access of data due to lack of
levels
entry by system users
8.
Confidential data available to everyone
8.
Security access for users to
8.
Security access for users to access
access confidential data
confidential data
9.
Report generation by personnel on
9.
Real time report generation at
9.
At present no reports generated due to lack of
demand
any given time
awareness and training

IV. METHODOLOGY
Since the present study was to identify the human risks
involved in the process of post-implementation in ERP
systems, questionnaire and in depth responses was the
method adopted for data collection. To avoid prejudice,
interviews and sampling is conducted across the various
levels of the organizations, giving a more balanced, fair and
objective information. A manufacturing unit in India was
selected for this case study in order to analyze postimplementation human factors that lead to failure of ERP in
SMEs in India. The CEO, the MIS lead and six randomly
selected end users from different departments were
interviewed. Since all variables have been broadly studied
and discussed in diverse and plentiful literature and is tested

in the corresponding literature, the content validity appears

good. The literature that was reviewed in previous sections
offered the opportunity to identify and assess the human
factors in ERP post-implementation ontology. These factors
were further explored by carrying out semi-structured
interviews in the organization which had implemented the
ERP system. A further questionnaire was designed and
provided to 10 users of the ERP system at the organization
under study.
A. Design of the Questionnaire
A simple, relevant, structured questionnaire covering
various human related factors with regards to the postimplementation of the ERP system was designed to carry out
the survey within the organization. The questionnaire was

divided into two main sections, part-A and part-B. While

part-A consisted of general questions that were also asked
during the interview with the different users of the ERP
system in order to understand the success and failure factors
that are seen in ERP systems. Part-B consisted of a
qualitative questionnaire with 4 sections each containing 5
questions. The sections included were psychological
characteristics, behavioral characteristics, lack of sufficient
and continuous training and human mistakes that occur due to
data entry. The responses were subjectively marked
according to the scale given from least likely to most likely.
The questionnaire is shown in appendix-B.
B. Conducting the Survey
The questionnaires were given to various users of the ERP
system in person at the organization. The users were
requested to hand in the response at the earliest, but due to
reservations the questionnaires were not handed in time. Only
8 questionnaires were handed in and the corresponding
results were analyzed as part of the research.
C. Scale Used
After gathering the data from the respondents to the
questionnaire the data was then edited, tabulated, analyzed
and results then interpreted as part of the research. Since it is
difficult to quantify subjective responses to various
responses, a quantitative scale of the data was used. The total
number of people considering a particular operation was
considered and the results were then tabulated. The
percentage responses of each section were hence determined.
V. DISCUSSIONS
It is seen in the questionnaire responses, given by 8 ERP
system users within the organization under study that the
psychological characteristics under consideration, which
Human Risks
Psychological
Characteristics
Behavioral
Characteristics

Lack of sufficient
and continuous
training

Human mistakes

include fear of loss of job due to new implemented system,

lack confidence in ability to adapt to the systems
requirements, reluctant to use the ERP system,
unwilling/incapable to take up additional responsibilities and
the fear that the system will capture mistakes has a 65%
factor of least likely to occur, 22.5% factor it is less likely to
occur and a 12.5% factor of being remaining same. The
behavioral characteristics under consideration, which include
users failing to maintain up-to-date and comprehensive data,
unwilling to release responsibility and power to other staff,
decisions taken without consulting users of the ERP system,
no sufficient support from top-management and postimplementation ERP-related problems not being reported
promptly has a 22.5% factor of being least likely to occur,
40%factor of being less likely to occur, 27.5% factor of
remaining the same and a 10% factor of being more likely to
occur. The lack of sufficient and continuous training factors
under consideration, which included users being
uncomfortable to input data into the system, failing to obtain
needed data, information and reports from the system, unable
to receive sufficient technical support from system vendors,
system not being customized according to business model
followed and ERP system requiring too much unnecessary
information has a 2.5% factor of being less likely to occur,
27.5% factor of remaining the same, a 42.5% factor of being
more likely to occur and a 27.5% factor of being most likely
to occur. The human mistakes at the time of data entry under
consideration, which included input of incorrect data into the
system, repeating data entry as it fails to capture information,
redundant data due to double entry, unable to finish work
until other users complete tasks and incorrect information
stored in the database has a 5% factor of being less likely to
occur, 15% factor of remaining the same, a 35% factor of
being more likely to occur and a 45% factor of being most
likely to occur.

TABLE 2, HUMAN RISK FACTORS POST IMPLEMENTATION

Factors considered
OR1.1 Operational staff are reluctant to use the system
OR4.2 Non-accounting staff are unwilling/incapable to take up accounting responsibilities
OR2.2 Fail to maintain up-to-date and comprehensive customer info files
OR4.1 Accounting staff are unwilling to release accounting responsibility and power to non-account staffs
AR1.1 Front-line managers refuse to use the system
OWR1.1 Top managers make important IT decisions without consulting IT experts and system users
OWR1.3 Top managers do not provide sufficient support to ERP post-implementation
OWR4.3 ERP-related problems are not reported promptly by system users
OR2.1Sales staff are not able to obtain needed data and information from the system
AR1.2 Managers cannot retrieve relevant and needed information from the system
AR2.1 Fail to use the system to generate accurate sales forecasts
AR2.2 Fail to utilize the system to predict demands of new products
AR4.1 Fail to use the system to generate appropriate financial budgets
OWR4.1 Users (both staff and managers) do not receive sufficient and continuous training
OWR4.2 Users are uncomfortable to input or retrieve data from the system
OWR5.1 Cannot receive sufficient technical support from system vendors
OWR5.2 Cannot receive sufficient and proper consulting advice from system consultants
OR1.2 Operational staff input incorrect data to the system

Reference [28] is considered and out of the 40 risk factors,

7 technical risks are system related as defined by the ERP
post-implementation ontology under technical risks (TR). It is
found that the remaining 82.5% risks are due to human
related factors. This review of literature will not consider the
5 human risk factors that have a relation to the risks that
occurred due to system vendor prior to the go-live stage.
These include analytical risks AR2.3, AR3.1and AR3.2, and
organization wide risks that include OWR4.4 and OWR4.5.
There are 7 other risks defined which on further analysis is
related to the administrative shortcomings which is defined
under organizational-wide risks. Those include OWR 1.2, and
all the risks in OWR2 i.e., IS/ERP planning and OWR3 i.e.,
in-house specialists. Operational risk OR3 in the material and
production area can be attributed due to OR1.2 i.e.,
operational staff input incorrect data into the system which is
due to psychological characteristics of the person. Since from
system implementation to utilization, there is a constant need
for human support and data being the most critical factor in
the system has to be fed into the system by humans and a
system is only as effective as the users efficiency. These
human risks are impediments to maximizing the use of the
functionalities of the ERP system in the post-implementation
phase. Hence the remaining 18 risks were sub categorized in
table 2, according to psychological characteristics, behavioral
characteristics, lack of sufficient and continuous training and
human mistakes that occur due to data entry.
VI. CONCLUSION
This paper identified the various human related factors to
be considered in the post-implementation phase of ERP
systems. While relying on previous research done in the field
and elaborating on the research with regards to an Indian
SME, this paper brings out the risk factors seen due to human
related activities during the post-implementation phase. The
broad classification of the risk factors in terms of
psychological, behavioral, lack of training and human
mistakes shows us that the successful application of the ERP
system lies in the end user. Hence the risks involved with this
important resource driver have to be carefully analyzed. The
following suggestions are made under various broad headings
in order to effectively reduce the human related risks for the
post-implementation phase of the ERP adoption in various
SMEs.
Organizational leadership - Organizational leadership is
important in developing and promoting a vision for the
enterprises IT infrastructure and the role of the ERP system.
Leaders need to keep abreast of progress and make
adjustments to organizational systems and processes as
necessary to shape the utility of the system. An organizing
logic for the IT activities in line with the enterprises strategic
objectives needs to be developed and articulated. A strong
leadership from the management and from the driver of
change management is a key factor that would ensure a
successful utilization of the ERP system.

Communication between top-management and end users The lack of communication between the top managements
decision to implement ERP and the end users of the ERP
system leads to the fear of loss of job by the end users. This
also leads to reluctance in use of ERP system by the end
users. . The management plays a key role here in ensuring
that their view on chain management in the enterprise is fully
understood by their respective employees. Good
communication and reasoning for the adoption of change by
the management with the end users can reduce these risk
factors
Support from top management - Adoption of change in
the work environment increases fear in the end users. They
lack confidence in ability to adapt to the systems
requirements. Most end users are unwilling or incapable to
take up additional responsibilities or to release responsibility
and power to other staff. They also fear that the system will
capture mistakes and no sufficient support from topmanagement post-implementation can also lead to risks
Human resources management - In the absence of inhouse expertise, the enterprise turns to outside consultants to
facilitate the ERP implementation process. ERP-related
problems are not reported promptly. The management of inhouse and external human resources in a coordinated manner
is critical for the success of post implementation.
Selection of appropriate system driver - Implementing an
ERP system is a careful exercise in strategic thinking,
precision planning and negotiations with departments and
divisions. Given that most end users find that their need
functionality is missing from the ERP package due to lack for
training and understanding of the system. It is important that
a fully informed system driver needs to be selected from
within the company in order to drive the system and ensure
applications are fully utilized.
Cross-functional
coordination
ERP
postimplementations require coordination across different
functional areas as well as with external project members.
The lack of coordination can result organizational delays
leading to conflicts which negate the very purpose of an
integrated package. Cross-functional coordination may be
enabled by management ensuring that end users maintain a
discipline of keeping an up-to-date system and having weekly
meetings and analyzing reports to verify user involvement in
the system.
Continuous user training and support from ERP consultants Lack of sufficient user training and failure to completely
understand how enterprise applications change business
processes is a major hindrance to develop a good return on
investment for the management. The end users are
uncomfortable to input data into the system or fail to maintain
up-to-date and comprehensive data or obtain needed data,
information and reports from the system. They should be
willing to listen to outside experts in order to fully utilize the
functionalities of the system when the relevant training is
provided. There is a need for a more structured training to be
provided by the system vendors/ consultants to various firms

adopting ERP within their organization since this change

management initiatives success relies on the human response
to the system.
Confidence in ERP system implemented - The parallel
and simultaneous maintenance of two systems (i.e., the old
system followed and the ERP system), of data collection in
the organization doesnt serve the very purpose of the ERP
systems implementation in the enterprise. The ERP package
is configured to more closely fit the enterprises structure,
business practices and workflow. This fine-tuning of the
standard system has enabled a more comprehensive database
being developed. Confidence in the ability of the system
meeting the organizational goals has to be developed in order
to effectively utilize the system.
Accurate data entry by end users - End users at times
input incorrect data into the system or repeat data entry as it
fails to capture information. This leads to redundant data due
to double entry or incorrect information stored in the system
database. A more careful approach for data entry has to be
adopted by the system end users in order to reduce these
human mistakes.
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APPENDIX A
REFERENCE [28] TABLE OF POST-IMPLEMENTATION RISK ONTOLOGY

Operational Risk
(OR)

Analytical Risk
(AR)

ERP Postimplementation
Risk

OR1
In general
OR2
Sales and
Marketing area
OR3
Material and
production area
OR4
Financial and
accounting area
AR1
In general
AR2
Sales and
marketing area
AR4
Financial and
accounting area
AR4
Financial and
accounting area
OWR1
Top management
OWR2
IS/ERP planning

OrganizationalWide Risk
(OWR)

OWR3
In-house specialists

OWR4
System users

Technical Risk
(TR)

OWR5
System vendors and
consultants
TR1
System integration
TR2
System faults
TR3
System
maintenance and
revision

OR1.1 Operational staff are reluctant to use the system

OR1.2 Operational staff input incorrect data to the system
OR2.1Sales staff are not able to obtain needed data and information from the system
OR2.2 Fail to maintain up-to-date and comprehensive customer info files
OR3.1 System contains inaccurate supplier records
OR3.2 System contains inaccurate or incomplete bill of materials
OR3.3 System contains inaccurate inventory records
OR4.1 Accounting staff are unwilling to release accounting responsibility and power to nonaccount staffs
OR4.2 Non-accounting staff are unwilling/incapable to take up accounting responsibilities
AR1.1 Front-line managers refuse to use the system
AR1.2 Managers cannot retrieve relevant and needed information from the system
AR2.1 Fail to use the system to generate accurate sales forecasts
AR2.2 Fail to utilize the system to predict demands of new products
AR2.3 System fails to support sales personnel to provide special sales promotion to existing
customer
AR3.1 System fails to generate appropriate master production schedule
AR3.2 System fails to generate appropriate material net requirement plan
AR4.1 Fail to use the system to generate appropriate financial budgets
OWR1.1 Top managers make important IT decisions without consulting IT experts and system
users
OWR1.2 Substantial personnel change in the top management team
OWR1.3 Top managers do not provide sufficient support to ERP post-implementation
OWR2.1 IS/ERP development plan is missing, ill-defined or misfit with business strategy
OWR2.2 Direction for further ERP improvement and development is unclear
OWR2.3 Budget and fund assigned to ERP post-implementation is insufficient
OWR3.1 Fail to form an efficient cross-functional team to continuously review the system
OWR3.2 Lose qualified IT/ERP experts
OWR3.3Lose ERP-related know-how and expertise accumulated over time
OWR4.1 Users (both staff and managers) do not receive sufficient and continuous training
OWR4.2 Users are uncomfortable to input or retrieve data from the system
OWR4.3 ERP-related problems are not reported promptly by system users
OWR4.4 Data access right is authorized to inappropriate users
OWR4.5 Confidential data is accessed by unauthorized people
OWR5.1 Cannot receive sufficient technical support from system vendors
OWR5.2 Cannot receive sufficient and proper consulting advice from system consultants
TR1.1 Different modules of the ERP are not seamlessly integrated
TR1.2 Legacy systems are not compatible with new ERP systems
TR2.1 Invalid data is not automatically detected when getting into the system
TR2.2 Hardware or software crash
TR3.1 Technical bugs of the system are not overcome speedily
TR3.2 Outdated and duplicated data is not properly managed
TR3.3 System is not properly modified to meet new business requirements

APPENDIX B
Questionnaire to determine Human Risk Factors in Post-Implementation Phase of ERP in SMEs in India
Part A
1.
2.
3.
4.
5.
6.
7.
8.

What were the driving forces for adopting the ERP system?
Would you consider the ERP system implemented a success or a failure?
Does the system offer more features that assist the organizations objective, than before the adoption of the ERP system?
Are you still using any prior systems simultaneously? If so, state a reason?
Do you have additional work post-implementation of the ERP system?
State the advantage noticed in the ERP system implemented in your organization?
State the disadvantage noticed in the ERP system implemented in your organization?
What methods would you suggest to reduce human related risks during the post implementation phase of ERP?
Part B

Put a tick () in the appropriate box for the given risk factors that you consider to occur.
Risk Factors

Least
likely

Psychological Characteristics
Fear of loss of job due to new implemented system
Lack confidence in ability to adapt to the systems requirements
Reluctant to use the ERP system
Unwilling/incapable to take up additional responsibilities
Fear that the system will capture mistakes
Behavioral characteristics
Fail to maintain up-to-date and comprehensive data
Unwilling to release responsibility and power to other staff
Decisions taken without consulting
No sufficient support from top-management post-implementation
ERP-related problems are not reported promptly
Lack of sufficient and continuous training
Uncomfortable to input data into the system
Fail to obtain needed data, information and reports from the system
Cannot receive sufficient technical support from system vendors
System is not customized according to business model followed
ERP system requires too much unnecessary information
Human mistakes
Input incorrect data into the system
Repeat data entry as it fails to capture information
Redundant data due to double entry
Cant finish work until other users complete tasks
Incorrect information stored

Less
likely

Same

More
likely

Most
likely