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The Top 5 ERP Success Factors by Project Stage from 22 Critical Success Factors

Top ERP Success Factors

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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):

Importance Description
1 Top management support
2 Project team competence
3 Interdepartmental cooperation
4 Clear goals and objectives
5 Project management
6 Interdepartmental communication
7 Management of expectations
8 Project champion
9 Vendor support
10 Careful package selection
11 Data analysis & conversion
12 Dedicated resources
13 Use of steering committee
14 User training on software
15 Education on new business processes
16 Business Process Reengineering
17 Minimal customization
18 Architecture choices
19 Change management
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.

Stage: Initiation    
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
     
Stage: Adoption    
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
     
Stage: Adaptation    
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
     
Stage: Acceptance    
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
     
Stage: Routinization    
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
     
Stage: Infusion    
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):

  1. Interdepartmental communication and cooperation.
  2. 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”).
  3. 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.

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[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.

6 Comments
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  • What do you think of the 3 common Critical Success Factors across all project stages that are evaluated at the end of this post?
  • For me the single biggest reason for project failure is “unrealistic expectations”.

    Several SAP projects start without a quantitative business case. Similarly, most projects also do not have sufficently quantifiable measures to determine success or failure. So people tend to take an arbitary view of success and failure at the end.

    Also, we have to understand that goals change with time, and this is a usual problem in lengthy projects.

    We also tend to think of estimates as things set in stone. So as new things come up in projects that were not foreseen – you will need additional resources/time/budget to solve it. And if this is considered as “over run” – then it just means we never understood the meaning of the word “estimate”.

    • Great observations about Project Management, but from the 3 common factors I would still place that in the categories on Management involvement (i.e. the key client PM) and vendor resources (the vendor PM). 

      Would you agree?  If so then it would still fit in the top 3 common areas.

  • Hi

    I have had the opportunity to do some research look at success factors using content analysis on SAP industry presentations (8,000+).  This research is valuable as it indicates that success factors differ over stages, ie a Temporal aspect.  But they also differ between Enteprise systems Components (ie HR, CRM APO etc) and Applications (ie reporting, interaction Centre, forecasting).  Research to date has generalised about success factors but practitioners want success factors as per the Temporal, Component and Application perspectives.

    • Paul,

      Have you already published the results of your analysis of the 8000 reviews?  If not, will you be publishing them soon?

      Bill Wood

  • Do you agree with the 3 success keys across all project phases: 1) Interdepartmental communication and cooperation, 2) Top management involvement, and 3) The quality of the implementation vendor?