The Top 5 ERP Success Factors by Project Stage from 22 Critical Success Factors
R3Now.com original image…
Recently I was reviewing academic material on ERP / SAP Project success factors. One particular study stood out because it laid out 22 specific success factors by project stage. [FN1] Even though this study dates from 2001, the Critical Success Factors (or CSFs) still ring true today, and the conclusions are consistent with what I have seen on SAP projects since I started in 1994.
While the sample size was somewhat limited (86 completed questionnaires) the data and information provided was useful for understanding some of the key or critical success factors. The stages reviewed were:
- Initiation – business need, software selection, vendor selection.
- Adoption – beginning of the implementation process and system design.
- Adaptation – implementation, adjustment, and business fit stage.
- Acceptance – go-live and productive business use of the system.
- Routinization – the overall acceptance and sustained productive use of the system.
- Infusion – long term acceptance and use of the system as well as additional functionality additions.
Based on the academic literature when the study was done, there were 22 key ERP Project Success factors that were defined (in order of the study’s response importance):
|1||Top management support|
|2||Project team competence|
|4||Clear goals and objectives|
|7||Management of expectations|
|10||Careful package selection|
|11||Data analysis & conversion|
|13||Use of steering committee|
|14||User training on software|
|15||Education on new business processes|
|16||Business Process Reengineering|
|20||Partnership with vendor|
|21||Use of vendors’ tools|
|22||Use of consultants|
This study went on to break out the top 5 reasons, by project stage, for project success. And what I have done is added one additional dimension. I assumed a sampling error rate of at least 3%. As a result, in each of the project stages there are areas that are statistically significant, and areas that are more likely dependent on each individual project. One important item to note is that while any particular project may have a completely different makeup, equating to entirely different factors of importance, these initial assumptions provide a great place to start an analysis.
Top 5 Success Factors by ERP Project Stage:
To make as much sense of the data as possible I assumed the lowest value of the top 5 was my baseline value and anything within 3% of that value was within any margin of error (the sample size may actually make the margin of error closer to 5%). As a result, anything within that margin of error I am considering a “toss-up” for any particular project. However, anything outside of that 3% range I am considering statistically significant and having much wider and more general application to most projects.
However, no item in the top 5 list by each stage of the project can be underestimated or overlooked. After all, these are the distilled “critical factors” for project success by project stage.
|1. Architecture choices||71%||Statistically significant|
|2. Clear goals and objectives||63%||On the margin|
|3. Partnership with vendor||61%||Margin of error|
|4. Top management support||61%||Margin of error|
|5. Careful selection of package||60%||Margin of error|
|1. Top management support||68%||Statistically significant|
|2. Project team competence||61%||Margin of error|
|3. Use of steering committee||60%||Margin of error|
|4. Partnership with vendor||60%||Margin of error|
|5. Dedicated resources||59%||Margin of error|
|1. Interdepartmental communication||65%||Statistically significant|
|2. Interdepartmental cooperation||63%||On the margin|
|3. Project team competence||63%||On the margin|
|4. Dedicated resources||60%||Margin of error|
|5. Use of vendors’ tools||60%||Margin of error|
|1. Interdepartmental communication||64%||Statistically significant|
|2. Interdepartmental cooperation||63%||Statistically significant|
|3. Top management support||56%||On the margin|
|4. Project team competence||55%||Margin of error|
|5. Education on new business processes||53%||Margin of error|
|1. Interdepartmental communication||51%||Statistically significant|
|2. Top management support||42%||Statistically significant|
|3. Interdepartmental cooperation||41%||Statistically significant|
|4. Vendor support||36%||Margin of error|
|5. User training on software||36%||Margin of error|
|1. Interdepartmental communication||39%||Statistically significant|
|2. Interdepartmental cooperation||35%||Statistically significant|
|3. Top management support||32%||Statistically significant|
|4. Vendor support||28%||Margin of error|
|5. Partnership with vendor||28%||Margin of error|
One thing that stands out in this analysis is that through much of the project stage, and then after the system is productive and live, interdepartmental communication and cooperation rank consistently at the top. Right behind them, top management is a consistent theme, and then vendor related prospects round out the top (vendor support, partnership with vendor, vendor’s tools, and project team competence).
Conclusion on ERP Project Success Criteria – The Top 3 Recurring Success Themes Across All Dimensions of an ERP Project
So, in broader or more general terms the academic literature bears out my personal experience. Across the entire project and application dimension the key success factors for ERP projects like SAP are (in order of importance):
- Interdepartmental communication and cooperation.
- Top management involvement (presumably this would help encourage the first item as well; see the post entitled “The Real Reason Executive Participation Creates IT Project Success”).
- The quality of the implementation vendor (consultants, tools, etc.). For more information on selecting a quality vendor see this four part series:
Achieve Breakthrough ERP, SAP, or IT Project Success: 1 of 4
Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP
Breakthrough Project Success: 3 of 4, Vendor Selection and Contracts
Breakthrough Project Success: Part 4 of 4, Last Low Risk Chance for Results
So Why do SAP or other ERP Projects Fail?
Obviously there can be any number of reasons why they would fail. Even the 22 success criteria for ERP or SAP projects listed in this post is not comprehensive. However you can be sure that when there are consistent themes across nearly all dimensions of a project, any of them that are lacking would create significant risk for failure. At some future date I will be publishing a proprietary and unique evaluation model which will help to clearly identify the key project risk areas specific to your company and your implementation.
For a quick summary of the 3 key areas and one of the high risk areas that you have the least amount of control over consider the following: after having selected the application system and the technical infrastructure to support it, these three items are critical ingredients for your ERP project success. Top Management involvement and interdepartmental cooperation are directly and completely within a company’s control, however the ability to influence the type of vendor is only indirectly controllable through the selection process. If the vendor selection process leads to the selection of a less than optimal vendor you may not realize your desired business benefits even if you get everything else right.
What this study points out even more clearly is why it is so critical to have consultants with verifiable experience (Screening Methods to Find the Right SAP Consultant), who can bridge the technology to business gap with strong communication skills (Screening Methods to Find the Right Consultant – Part 2).
The second item related to top management involvement may have reasons not considered here or in other resources; like the ability to imprint future strategy and business direction on the technology implementation. The post already noted (The Real Reason Executive Participation Creates IT Project Success) points this out and demonstrates the importance of senior level management involvement in a project.
Without those quality resources provided by your consulting or resource vendor your chances for project success diminish significantly.
[FN1] Somers, T., and Nelson, K., (2001) The Impact of Critical Success Factors (CSF) across the Stages of Enterprise Resource Planning Implementations. Proceedings of the 34th Hawaii International Conference on System Sciences.