Vol-7, Special Issue3-April, 2016, pp784-793 http://www.bipublication.com
Case Report
Prioritizing Success Vital Factors in the Implementation of Enterprise
Resource Planning (ERP) Commercial Firms
(Companies) of Mazandaran Province
Ahmad Vadadi1, Farideh Haghshenas Kashani2
and Mohammad Mehdi Arab Khazaeli3
1Department of Management, PhD in Public Management,
Assistant Professor, Central Tehran Branch, Islamic Azad University, Tehran, Iran.
2Department of Management, PhD in Business Management,
Assistant Professor and Faculty Member, Central Tehran Branch, Islamic Azad University, Tehran, Iran.
3Department of Management, Master of IT Management (MIT),
Electronic Branch, Islamic Azad University, Geshm, Iran.
ABSTRACT
Enterprise resource planning (ERP) is a management solution based on information technology that the aim of which was to the integrity and flow of information between all parts of the organization, including financial, production, warehouse, human resources, supply chain and customer management, which makes possible to facilitate planning and timely and quick response to customers. Thus, the present study has been developed to evaluate success vital factors in the implementation of the enterprise resource planning (ERP) in commercial firms (companies) of Mazandaran province. The research method was descriptive survey and taken to form field. The research population is all managers, experts and specialists in information technology systems and system integration in export businesses firms of Mazandaran province (n= 250), based on the Cochran formula, 151 subjects were selected as samples. Finally, 132 questionnaires were received. For evaluation vital factors affecting in the implementation of ERP was used research made questionnaires. To test the hypotheses, we used of the Kolmogorov-Smirnov test and Friedman test in the SPSS software. The results showed that all the internet and networks variables in technical factors and expertise resource in human resources factors, senior managementin operational factors, and organizational culture in organizational factors, are the first priority.
Keywords: Internet, Students, Moral values, Spiritual and Social Values.
1. INTRODUCTION
In today's organizations to continue his life, is the need to use new information systems. One of the important systems is an enterprise resource planning or ERP. Enterprise resources planning process is including planning and management of all available resources in the organization and uses it comprehensively. This process has the many advantages such as increased efficiency, improve quality, increase productivity and increase
in the organization. For example, statistics cited by the Standish research group in 2002, on the implementation of ERP systems show that 35% of ERP projects be stop; spend 55% more than the forecast budget; run less than 10% of ERP projects according to the previous schedule and budget; project costs is 178% higher than the approved budget; lasts about 230% longer than scheduled; and finally, in terms of function are at about 40 percent.ERP Technology are used in numerous foreign companies (European, American, etc.) and more recently in our country, we witnessed the implementation of this system in large-scale industry in Iran and have a number of commercial firms to use of these systems. For various reasons, including more competitive environment and market, etc., to act implement the enterprise resource planning systems and others are in the primary stages of election and implementation. It is expected that in the near future, all commercial firms of the province use of various organizational information systems due to the exploitation of the many advantages of this system and achieve their export targets turn to use it; however, according to studies conducted given the enormous costs of implementing ERP and unsuccessful experiences in implementing this system, lack of attention to the obstacles and challenges, as well, vital factors of these systems, not only may be not caused profitability and improve the situation, which can be caused enormous financial losses for companies. Several factors and methods involved in the successful implementation of enterprise resource planning systems (ERP) and are offering a variety of categories from these factors. One of these methods is a critical success factors in order to determine the basic needs of management information. Here, there is the assumption that there are between 3 to 6 key factor in any organization. If these factors act well, also would be appropriate organizational performance. Therefore, organizations must continuously evaluate the functions of these factors and correct if necessary. Critical factors exist at all levels of
network, in order to the development of e-commerce, and as the statistics show that in their implementation and successful implementation of a ERP system in the organization, involved several factors, which lack of attention to each of them may be lead to data redundancy and even project failure, we find the need to examine the major critical factors in implementing these systems to take advantage of opportunities and achieve competitive strategy and customer-oriented, in order to achieve the desired objectives export in businesses firms (export) of the province.
2. LITERATURE 2.1 Definition of ERP
Comprehensive definition is difficult to ERP. Experts have offered different definitions for ERP, each of which, by the attention certain aspects of this system. Perhaps, familiarity with the features, functionality and functions of ERP in different parts of the organization, in future, be a good help to fully understand of this system, but in this section, to be able to provide necessary grounds for addressing parts next, we studied different definitions, which is provided to the system. One of the best definitions that exist for ERP, include: ERP applications software package is a set of integrated modules ready to launch from pre-designed and pre-engineered, which covers all business processes of the organization. Achieve to maximum performance is very complex in implementing the software by synchronizing it with organizational needs. ERP is a more help to the organization to work in an integrated environment, in terms of intelligence and process and data-driven and as Real-time (Shahab et al., 2004).In the above definition, there are striking before addressing the other definitions is better placed to investigate them.Defined, clearly shows that ERP is a set or a software Suit. In literature of information and communication technology, Suit refers to a collection of standalone software, but related to each other, which are designed to achieve specific purposes. The possibility of rapid
what can be, in general be inferred from this definition is a full software coverage on processes that implemented the software for them. For example, with the implementation of accounting and finance modules are covered all the processes that have been defined the unit of accounting and financial (Saremi, 2007). Pre-designed, ready and engineered the ERP is represents some of the other features of this software package. ERP systems are designed based on the best existing processes in various industrial sectors. This means that processes are situated in ERP software packages to support their key procedures designed based on standardized procedure, which has been proven is the best way to do that particular process. For example, accounting practices embedded in the system of finance and accounting module taken from the study and analysis, financial systems of many organizations, and ultimately, provided the procedure which, behind different tests and is the best way to do that process. One of the features that are needed to be considered in this section is ready for this application. ERP software package ready and the pre-designed according to the features already mentioned it, is on the market and different providers, put it in the hands of organizations. Of course, ERP offered by each of them and has its own characteristics and there are many differences between them. This difference is mostly due to the foreground firm’s supplier of ERP. Some of them have a good background finance and accounting, and therefore finance and accounting modules offered by them is of great reputation. Some are a production and some are a specialized field providing human resources information systems. On the one hand, this difference in the fields and on the other hand, given these suppliers to specific industries and their attitudes toward to the ERP is in production different ERP software packages. For example, ERP offered by a supplier is suitable for the automotive industry and the other is suitable for universities and educational centers. Despite these differences in terms of structure and composition, there is no little difference between
the various ERP packages. It is worth mentioning, here is that some organizations do not buy ERP software package, but given the expertise that exists in their organization, they should take action with respect to ERP software development, which this issue has advantages and disadvantages countless that opportunity, it will be to it (Temur & Bolat, 2008).Implementation of ERP in the organization provides a unified platform for rapid exchange of information between bodies and various processes. This integration is mostly due to the fact that all system information only storage in a database and such as island systems available in organizations, information is not stored in different databases from each other from different perspectives. The same ERP infrastructure development in different modules provides the possibility of its development in the short term and long term. In other words, be use of the platform and similar programming language in design and construction all ERP modules (Faghri et al., 2006).
2.2 Success vital factors
satisfactory for the person, department or organization (Fard, 2000). In other words, success vital factors are characteristics, location or variables that, if appropriate be maintenance, support and management can play an undeniable role in the success of the company in a competitive market (Poster, et al., 2000). Success vital factors are limiting factors that have a critical role in the success of the organization, and if the organization wants to continue to exist must provide them. In other words, each success vital factors is context, we need to work on it, and they do best to be a successful organization. These factors are the basic requirements, which should already be achieved through goal setting to achieve the main goal (Slawomir, 2008). The success of an organization is the means to realize its benefits and achieve these benefits, it is necessary to provide the necessary factors. This approach initially, was used to determine managers' information needs. If to the truth be known and realized, success vital factors and needs a manager, in fact that manager has come to their goals and is guaranteed the success of the organization. If develop a reporting system to the management, would be able to produce reports on the success vital factors for managers, in fact, put a tool for measuring progress available to that manager, because that manager with the help of those reports can easily understand what has been their goals and now, how far away with the targets (Ghafarian & Kiani, 2001). This report contributes to the manager by comparing the current situation with the intended targets; identify problems and barriers that exist in achieving that goal and decision-making to solve them. Identify the success vital factors provide a clear definition of the types of information that should be collected and allowing to organizations focus their attention on what is needed. These factors, guidance organization towards the creation and evaluation of success and shows that the success of an organization's requirements. Also including the research that has been done in this field can be pointed to Amin Alvanchi research (2001), titled
real options pay to implementation of more efficient and more effective systems for ERP. The results of the research showed that implementation of ERP, based on real options instead be based on individual decisions, which consisted of a series of individual decisions that is in today's dynamic
environment, we enjoy the flexibility more as a result managers can do their planning in this area. Also, be evaluated, how active management in the implementation of ERP, through real options. Finally, the conceptual model is as follows:
The initial model of ERP implementing vital factors ERP (Nah. Low &Kuang Denmark & Alborg, 2001)
Fig1. Conceptual model
3. RESEARCH METHODOLOGY 3.1 Research question
What is prioritizing the success vital factors in the implementation of the enterprise resource planning system (ERP) in commercial firms (companies) of Mazandaran province?
3.2 Statistical populations
The study sample are all managers, experts and specialists in information technology systems and system integration in commercial firms export in Mazandaran province, which was approved by the Industries and Mines Chamber of Commerce of Sari branch, and Mazandaran commercial organizations. It should be noted from the mentioned companies, the companies that was a pioneer in the field enjoying, e-commerce applications in whole or in part and in the field of management information systems and information technology have a more and longer work, were
selected for this study statistical population that number was 250 people, and the sample size used in the Cochran formula and the sample is obtained 151 people.
3.3 Methods and data collection tools
In this study, the main tool for data collection was a questionnaire. To conduct research used a questionnaire consisted of 80 questions, which are related to variables organizational factors of operational/project management factors, technical factors, and individual/human resources factors. 3.4 Validity and reliability
Because in this study, the primary means of gathering information and the variables measure is the questionnaire, the validity of the questionnaire is of particular importance (Hafeznia, 2004). The most common reliability testing is Cronbach's alpha coefficient, which is also used in this study. Thus, 15 questionnaires were distributed among
Organizational vital factors - Organizational Culture - Organizat ionalSt ruct ure
ERP implementation
Technicalvit al factors - Hardw are
- Softw are
- Netw ork - Internet
Personal/ Human resources vital factors - Users
- Implement at ion
advice
the sample members and calculated Cronbach's alpha coefficient between the data collected. Cronbach's alpha reliability coefficient is between zero and one, where zero indicates a lack of reliability, and a positive one is full reliability. In this study, using of SPSS software showed amount reliability, which is indicative of the questionnaire is possessed of high reliability, which in this study, reliability obtained is equal to 0.96 percent to use the internet, measure the value and assessment of critical thinking.
3.5 Data analysis method
For processing and analyzing the results of questionnaires have been used for the statistical analysis of SPSS16software, which is composed of two sections; descriptive statistics and inferential statistics. Tests used include:
K
olmogorov-Smirnov test for uniformity data distribution.
F
riedman ranking test to evaluate the tested variables.
4. RESULTS AND FINDINGS
4.1 Statistical descriptions of population
Of the 151 people respondents, 94 people were women and 57 people were men, also, educational level of 12 people were lower than
bachelor, 98 people were bachelor, 41 people were master and above. 25 people weremanager, and 126 people were expert, 60 people had less than 10 years of experience, 51 people between 11 and 15 years of experience, 25 people between 16 and 20 years of experience, and 15 people more than 20 year of experience.
4.2 Kolmogorov-Smirnov test: testing normality of variables
In the statistics, used of parametric tests, when the data distribution is normal and used by non-parametric tests, when data distribution is not normal. So, at first, we have to pay to examine the data normality with the Kolmogorov-Smirnov test. Normality test results related to the components of the study are shown in Table1.
H0: Data distribution is normal. Sig. ≥ 0.05 H1: Data distribution is not normal. Sig. < 0.05
Table1. Kolmogorov-Smirnov test table for examine the normality of variables
Indicators
Organizational
factors
Operational factors Technical factors Individual factors
Number of samples
151
151 151 151
Test statistics
1.52 1.73 1.89 1.42
Significantly
0.02 0.01 0.02 0.03
Table1, and the obtained values (P<0.05=significance level) show that the H0 is not approved. So, with a confidence interval of 95%, it can be argued that the variables are not following a normal distribution. Therefore, it can be used a Friedman nonparametric test.
5. DISCUSSION AND CONCLUSION
Prioritization of effective factors in the success of the implementation of ERP, in economic firms of Mazandaran is shown in table 2. In short, we can say based on the survey results, the main factors influencing in the successful implementation of
ERP in economic firms of Mazandaran, in order of preference are technical factors, human
experts and consultants, in the operational factors, senior manager, and organizational factors, organizational culture has been the most influential factor. Also, according to the presented results offered the following suggestions: It is recommended, when ERP implementing systems pay attention to the corporate culture. In other words, create opportunity to implement the appropriate culture in ERP. According to the results, because of various factors of organizational culture, the leadership based on the results has most effective; it is recommended to commercial firms (companies) of province, the leaders of these organizations when ERP implementing more use are from leadership styles, based on the results, the timely implementation of ERP systems, pay attention to the organizational structure. In other words, create opportunity to implement an appropriate structure in ERP. According to the results, that among the factors of organizational structure, decision-making with the approval of the president has the greatest impact, therefore, recommended to the commercial firms (companies) of province, the leaders of these organizations when implementing ERP use more from styles of decision with the president passed.
We emphasize the timely implementation of ERP systems pay attention to the consultants’ components. In other words, create the opportunity for appropriate participation of consultants in implementation of ERP. According to the results, because of various factors of consultants component using the support and presence of internal consultant has most effective, therefore, recommended to the commercial firms (companies) of province, the leadership of these organizations at the time of implementation of ERP greater use from support and the internal consultant, recommended that, when implementing ERP systems, pay the necessary attention to specialists component. In other words, create the opportunity for appropriate participation of experts in the implementation of ERP. According to the results among other factors, the experts’ components of individual creativity, the amount of specialists in IT in organization has the greatest impact; it is recommended to commercial firms (companies) of province, the leadership of these organizations at the time of implementation of ERP, greater use of individual creativity of specialists in IT in the organization.
Table2. Ranking of primary and secondary factors influential in success of ERP in businesses firms of Mazandaran, based on ratings Friedman test
Row Main factors with priority Rating
Average Sub factors with priority Rating Average
1 Technical 3.53
Network and Internet 2.38
Software 2.04
Hardware 1.59
2 Individual/Human resource 2.57
Expert 2.42
Consultants 1.79
Users 1.78
3 Operational/Project
Management 2.05
Senior Manager 2.82
Project team 2.42
Project manager 2.37
Employees 2.31
4 Organizational 1.84 Organizational Culture 1.61
Organization Structure 1.39
It also recommended that, when implementing ERP systems, pay attention to senior management component. In other words, create the opportunity for appropriate participation of senior management in implementation of ERP.
According to the results, because of various factors of components of senior management, the senior management commitment to the
commercial firms (companies) of province, the leadership of these organizations in implementing an ERP, pay more attention to top management commitment compared to the dimensions of the project in the organization, we emphasize the timely implementation of ERP systems, pay attention to the components of the project manager. In other words, create the basis for the appropriate project manager in the implementation of ERP.According to the results, because of various factors of project manager components, the project manager commitment to the magnitude of the project in organization has the greatest impact, therefore, recommended to the commercial firms (companies) of province, the leadership of these organizations in an implemented ERP, pay attention to project manager commitment, about the size of the project, it is suggested then systems should be implemented ERP, pay necessary attention to the project team. In other words, create opportunity, to implement the appropriate project team in ERP. According to the results, because of various factors of the project team, the project team members enthusiasm and a positive attitude and creative thinking of them will have the greatest impact, therefore, recommended to the commercial firms (companies) of province, the leadership of these organizations, in case of implementation of ERP, greater use of project team members enthusiasm and a positive attitude and creative thinking in the organization, we emphasize the timely implementation of ERP systems, pay attention to the hardware components. In other words, create opportunity to implement a suitable hardware platform in ERP. According to the results, because of various factors of hardware components, the use of hardware with high reliability features has the greatest impact, therefore, recommended to the commercial firms (companies) of province, the leadership of these organizations at the time of implementation of ERP, use more from a hardware platform with high reliabilities in organization, we emphasize the timely
implementation of ERP systems, pay necessary attention to software components. In other words, create opportunity to implement a suitable software platform in ERP. According to the results, because of various factors of software components, the user friendly, a user or enjoy working with the software has the most effective, so we recommend to commercial firms (companies) of province, the leaders organizations when implementing ERP, use more than a platform with the user friendly capability in organization, and finally, recommended that, when implementing the ERP systems, pay attention to the internet components. In other words, create opportunity to implement a more favorable environment for web components in ERP. According to the results, because of various factors of internet components, the right choice the appropriate network protocol in order to increase the speed of information exchange between client and server has the greatest impact, therefore, recommended to the commercial firms (companies) of province, the leaders of these organizations, when implementing ERP, pay more attention to the right choice appropriate network protocol in order to increase the speed of information exchange between the client and servers in the organization.
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