how alignment strategies influence erp project success

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How alignment strategies influence ERPproject successMary R. Sumner aa Southern Illinois University Edwardsville, Computer Managementand Information Systems , Campus Box 1051, Edwardsville, IL,62026, USAPublished online: 13 Oct 2009.

To cite this article: Mary R. Sumner (2009) How alignment strategies influence ERP project success,Enterprise Information Systems, 3:4, 425-448, DOI: 10.1080/17517570903045617

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How alignment strategies influence ERP project success

Mary R. Sumner*

Southern Illinois University Edwardsville, Computer Management and Information Systems,Campus Box 1051, Edwardsville, IL 62026, USA

(Received 3 May 2009; final version received 15 May 2009)

The purpose of the study was to conduct an analysis of ERP implementations todevelop a grounded theory of why, when, and how the successful alignment ofERP-supported processes and business needs is achieved over time and to identifyalignment strategies that enable organisations to achieve a ‘fit’ between ERP-supported processes and business needs. The alignment strategies which supportthe best practices revealed in the case studies include functional expertise,knowledge integration, liaison mechanisms, project governance, and the scopeand integration of enterprise-wide processes.

Keywords: enterprise systems; functional expertise; knowledge integration; liaisonmechanisms; project governance

1. Background and rationale

Enterprise systems are implemented to enable data integration, efficiency, and cross-functional process integration (Barki and Pinsonneault 2005, Gattiker and Goodhue2005). The integration of data and processes requires that the ERP system be alignedwith the best practices that the system is designed to support. This is called ‘tightcoupling’.

When ERP systems are introduced into an organisation, there is often a ‘mis-fit’between the best practices supported by the software and the existing processes ofthe organisation. In order for ERP systems to be successful, the organisation can re-engineer its processes to ‘fit’ the best practices supported by the ERP software. Ingeneral, re-engineering or ‘tight coupling’ is needed to achieve the benefits ofintegration and control that are associated with ERP implementation (Ciborra 2000,Srivardhana and Pawlowski 2007, Sumner 2002).

However, the ‘gaps’ between the best practices of the ERP software and existingorganisational practices can be quite great (Soh et al. 2003). To address these gaps, onealternative is to customise the software to support existing organisational processes.Another alternative is for end-users to do ‘work-arounds’ or improvisations which leadto ‘drift’. That is, end-users continue to conduct their practices outside the system (Sohet al. 2003, Bourdreau and Robey 2005, Wagner and Newell 2004).

A number of researchers have examined settings where enterprise systems havebeen implemented with ‘work-arounds’. This is known as ‘loose coupling’. ‘Loose

*Email: [email protected]

Enterprise Information Systems

Vol. 3, No. 4, November 2009, 425–448

ISSN 1751-7575 print/ISSN 1751-7583 online

� 2009 Taylor & Francis

DOI: 10.1080/17517570903045617

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coupling’ involves the timing and performance of activities different from theexpectations of the system (Pollack and Cornford 2004, Wagner and Newell 2004,Soh et al. 2003). The problem with ‘loose coupling’ is that the benefits of process anddata integration that should result from ERP implementation are compromised.

The dilemma between re-engineering processes to fit the best practices supportedby the ERP software or customising the software to fit current practices is anorganisational challenge. This dilemma calls for a better understanding of alignmentstrategies. Hence, the purpose of this study is to determine the alignment strategieswhich enable organisations to achieve a fit between ERP and business needs.

2. Research objectives

. To conduct an analysis of ERP implementations to develop a grounded theoryof why, when, and how the successful alignment of ERP-supported processesand business needs is achieved over time.

. To identify alignment strategies that enable organisations to achieve a ‘fit’between ERP-supported processes and business needs.

3. Theoretical foundations

The purpose of this study is to analyse the organisational processes which are usedto achieve alignment between ERP functionality and business needs. The theoryof technology-mediated organisational change (Volkoff 2007) suggests that anenterprise system involves a complex and lengthy process of implementation andchange. A number of studies support the contention that ERP implementation isaligned with competitive strategy. In a study investigating the relationship betweenERP implementation strategy and competitive strategy in five case study firms, Yenand Sheu reported that when firms focused on the competitive priorities of flexibilityand quality, then ERP implementation practices were designed to support thesecompetitive priorities. Standardised manufacturing and operating processes wereimplemented to support quality, consistency, and make-to-stock production. Otherimplementation practices included centralisation of decision-making, softwarecustomisation, information sharing, and data accessibility. When local autonomywas a competitive priority, this resulted in greater package customisation and easieraccessibility to the ERP database. Cross-cultural factors and governmental policiesalso influenced ERP implementation practices, including local software selection(Yen and Sheu 2004).

In this study, specific alignment strategies will provide a theoretical perspective tounderstanding the alignment of ERP-supported processes with business require-ments. These alignment processes include functional expertise, knowledge integra-tion, liaison mechanisms, project governance, and scope and integration.

3.1. Functional expertise

ERP systems must support the functional requirements of the business. In addition,because ERP systems integrate cross-functional processes, functional area managersneed to understand the inter-relationships among these processes. There is evidencethat knowledge sharing is more effective when groups are structurally diverse,represent different functions, work in different business units, and report to differentmanagers. Knowledge sharing across functional lines of the business can lead to

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better performance (Cummings 2004). The implication is that integration of ‘diversework groups’ supports performance. The research on success factors in ERPimplementation confirms that business experts should be assigned to the project on afull-time basis (Brown and Vessey 2003, Motwani 2002, Brady and Gargeya 2005).

3.2. Knowledge integration

Organisational knowledge is embedded knowledge, knowledge which resides inspecialised relationships among individuals and groups and in the particular norms,attitudes, information flows, and ways of making decisions that shape their dealingswith each other.

(Badaracco 1991)

Knowledge integration is the extent to which knowledge is shared across theorganisation and enables its members to better perform their tasks (Grant 1996).Common knowledge includes specialised knowledge that is common to allmembers of a group; it is integrated knowledge (Grant 1996). Knowledgeintegration is the combination of specialised knowledge to create new knowledgeand to improve the organisation’s capabilities (Sabherwal and Beccera-Fernandez2005).

An example of knowledge integration is functional managers who have technicalknowledge and can bring this technical knowledge to address real business problems.Another example of knowledge integration is IT managers who have functionalbusiness knowledge and can communicate with their functional manager counter-parts. Knowledge integration is facilitated by the collaboration between teammembers with functional business knowledge and team members with technicalknowledge.

The relationship between IS professionals and managers has to be one of mutualunderstanding.

(Keen 1988)

Shared knowledge between IS professionals and line managers is important foreffective IS performance (Nelson and Cooprider 1996). Shared knowledge removesbarriers to understanding and acceptance between IS and line managers, (Kraussand Fussell 1990), makes it possible to use IT to support the functions of the firm(Henderson and Venkatraman 1993), and fosters interdependence that is critical incomplex environments (Schrage 1990).

Mutual trust and influence between IS professionals and their line customersleads to increased shared knowledge (Nelson and Cooprider 1996). Mutual trust, theexpectation shared by IS and line groups that they will meet their commitments toeach other, is developed by repeatedly working together. Mutual influence is theability of groups to affect the key policies and decisions of each other. Mutualinfluence results in mutual policy making and decision making, leading to sharedknowledge. Once shared knowledge is achieved, then groups can achieve super-ordinate goals that are beneficial to both groups.

In a study of the factors that facilitate knowledge management in implementingERP systems and their association with achieving competitive advantage, Li andZhao found that organisational preparation for knowledge management, access toinformation networks and communications systems, and employee education andtraining were important items for knowledge management. Integrating the use of

Enterprise Information Systems 427

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ERP and improving users’ skills and knowledge to use ERP were critical to success,so organisations need to provide employee learning and training to achieve theresults of ERP. This means creating a learning environment that is critical tolearning new processes. ERP systems fail when users are unwilling to adapt to newprocesses and do not have sufficient training (Li and Zhao 2006).

3.3. Liaison mechanisms

Liaison mechanisms facilitate the sharing of knowledge between functional groupsand IT professionals in ERP projects. Liaison mechanisms facilitate knowledgeintegration because these liaison mechanisms facilitate communications and co-ordination. Cross-functional team structures increase information processing andimprove intra-organisational communication. In contrast, permanent teams mayhave a negative effect on knowledge transfer and may reduce knowledge integration(Ford and Randolph 1992). Liaison mechanisms can influence decisions related toERP/business ‘fit’. Cross-functional project teams are associated with knowledgeintegration and project success (Cohen and Bailey 1997).

3.4. Project governance

Project governance is the key to assuring that ERP project decisions support overallbusiness goals. Governance structures in the IT domain are steering committeeswhich are responsible for measuring the impact of IT investments on businessresults. In the ERP project literature, the role of a steering committee is a commonlymentioned critical success factor (Mabert et al. 2003). The steering committee isresponsible for making sure that investments in ERP are justified in terms of businessoutcomes.

3.5. Scope and integration

Business process integration is related to the scope of the ERP implementation, sincegreater scope means that cross-functional business processes are integrated to agreater extent (Ranganathan and Brown 2006). Purchasers of multiple ERP moduleshave greater financial benefits and better process outcomes than purchasers of singlemodules (Ranganathan and Brown 2006, Hitt 2002, Karimi 2007). In addition,implementing ERP across multiple locations creates standardised processes andcommon data across the enterprise and translates into better operating performanceand lower costs (Volkoff 2007). The implementation of ERP in every unit also makesthe above-mentioned strategies (functional expertise, knowledge integration, liaisonmechanisms and governance) more important than in the implementation of a singlemodule within a business unit.

A number of studies support the contention that a commitment to processimprovement and the creation of a standardised infrastructure has a positive effecton successful ERP implementation. Since total quality management (TQM) is aphilosophy that emphasises process improvement, and since ERP transforms acompany’s business processes, companies with a TQM focus can facilitate thetransition to ERP (Li et al. 2008).

Companies implementing ERP must re-engineer business practices, includ-ing employee training, production planning and control, and quality management

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(Al-Mashari et al. 2003). Having a manufacturing infrastructure in place prior toenterprise systems implementation has positive effects on successful ERP imple-mentation and positive effects on customer-focused performance, production/operations performance, and financial performance (Li et al. 2008). Manufacturinginfrastructure includes organisational change, quality management, process re-engineering, staff learning and training, organisational policies, and measurementand reward systems (Hayes et al. 2005).

4. Research methodology

The study uses the grounded theory approach (Glaser and Strauss 1967). In thegrounded theory approach, qualitative data is gathered and used to guide the theory-building process. The data collection phase used case studies, interviews, andobservations in the context of ERP implementations. The first round of interviewswas designed to identify ERP implementation practices and to develop corecategories for organising the data. The second round of interviews applied thetheoretical concepts gathered from the first round of interviews to depict therelevance of the theories of alignment strategies in the context of ERPimplementation.

4.1. The case studies

The study used a case study design. The case studies consisted of five organisationsimplementing enterprise systems between 1996 and the present. The organisationsparticipating in the study included two companies implementing SAP, one companyimplementing Peoplesoft, one company implementing Oracle, and one firm using abest-of-breed approach. In the follow-up timeframe, the company implementingOracle transitioned to SAP as a part of a global SAP implementation. As you can seefrom Table 1, the companies were large, global Fortune 500 firms, ranging from $3billion to $32 billion in sales.

Another commonality among these firms is the extensive scope of their respectiveERP implementations. In each case, the enterprise system supported multiplebusiness functions, including:

. Sales and distribution.

. Materials management.

. Production planning.

Table 1. Firm profiles.

Firm type Sales ERP Project justification

Firm A: Consumer 16,700,000,000 SAP Operational efficiency, cost reductionFirm B: Chemical 8,650,000,000 SAP Global business process standardisationFirm C: Aerospace 32,400,000,000 Best of

breedLean manufacturing, common

business processesFirm D: FinancialServices

3,000,000,000 Peoplesoft Re-engineering of business processes

Firm E: Consumer 13,930,000,000 SAP Worldwide data integration,centralisation of financial controls


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. Financial accounting.

. Controlling.

. Quality management.

Each of the companies implemented ERP at multiple sites. It should be notedthat several organisations implemented ERP on a global scale and employed thesame implementation strategies across multiple locations as they used in the USimplementation. The use of multiple case studies provided an opportunity to studypatterns between competitive priorities and ERP implementation practices.

4.2. Data collection

Using the grounded theory approach, there were two phases of the project. The firstphase entailed data collection using structured interviews, and the second phaseentailed structuring of the data around the theoretical frameworks depictingalignment strategies.

Two rounds of interviews were conducted. The first round of interviewsregarding ERP implementation was conducted to obtain information on the ERPimplementation practices and critical success factors for the five ERP projects.The second round of interviews was conducted to identify changes in ERPimplementation strategy and alignment as these projects evolved over time. Thesecond round of interviews was conducted several times between two and fiveyears after the first round of interviews. This provided a longitudinal perspective.Each set of interviews was conducted with the project manager responsible forERP project implementation. Additional interviews were conducted with ERPproject team members. Following each interview, the interviewer took detailednotes and organised these notes into a matrix for the purpose of qualitative dataanalysis. A second researcher collected similar data for each case study, and theinterview results were validated by comparing the structured interviews with eachother.

4.3. First phase: data collection

The data were collected using structured interviews. Interviews were conducted withERP project managers in the case study organisations. The preliminary interviewsused the project retrospective instrument (Nelson 2005) to obtain data on the projectcharacteristics, project management organisation, project timeline, project riskassessment, project success measures, and critical success factors. See the Appendixfor the structured interview form. The interview transcripts were used to classify datainto core categories.

The focus of the interviews included:

(1) Motivations for the ERP project, including business and system benefitsused as project justification.

(2) Project leadership and management, including the project managerexperience, project team characteristics, and the project steering committee.

(3) Project characteristics, including project timeline and costs.(4) Project scope, including the percentage of business processes supported by

the system.

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(5) Skill sets of IT professionals and end-users relevant to ERP.(6) Business process re-engineering: the extent of ‘vanilla’ implementation and

the extent of customisation.(7) Project success, as measured by on-time, on-budget completion.(8) Project quality, including the extent to which the system met user

requirements, use, and maintainability.(9) Issues that took place when the system went live, user acceptance, and

lessons learned.(10) Measures of ERP effectiveness, including business outcomes and achieve-

ment of systems goals.(11) Critical success factors for project success, including project

manager expertise, training effectiveness, top management support, role ofthe project champion, change management, and steering committeeleadership.

4.4. Second phase: coding, analysis, and conceptualising

During the second phase, the data were organised using the theoreticalconcepts derived from the first interview round in order to identify phenomenain the data supporting the key theoretical constructs. The interpretations of theissues found in the data were relevant to the theoretical framework, which isconsistent with exploratory and interpretive research design (Stebbins 2001,Walsham 2006). The alignment strategies and issues relevant to them wereinvestigated.

5. Findings: case studies of ERP implementation

In this section, the findings of the five case studies are described. The findingsinclude a discussion of the ERP project, project leadership, project success,and lessons learned. Table 2 summarises the findings across the case studiesand provides the basis for an analysis of alignment strategies in each of the ERPprojects.

5.1. Firm A

The company engages in manufacturing and distribution. In 2008, the company had31,400 employees, with $16.7 billion in sales. In 1996, Firm A initiated its SAPproject, with an original justification of implementing a financial reporting systemusing integrated data.

5.1.1. The ERP project

Between 1996 and 2006, Firm A implemented SAP modules, including finance (FI),sales and distribution (SD), production planning (PP), materials management (MM),plant maintenance (PM), asset management (AM), human resources (HR), andquality management (QM). After the core SAP modules were implemented, Firm Aimplemented SAP’s business warehouse (BW), on-line procurement, and aproprietary product costing system. The project sponsor was the Chief Financial


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Table

2.

ERPcase

studies. Firm

AFirm

BFirm

CFirm

DFirm

E

Project

justification:

business

Cost-reduction

Operational

excellence

Businessmetrics:

inventory

turns,

reducedmaterial

shortages

Cost

savingsthrough

businessprocess

integration

Centralisationof

financialcontrols

Project

justification:

system

Data

andprocess

integration

Data

andprocess

integration

Reducedcost

of

maintaininglegacy

system

s

Data

integration,

commonsystem

sWorldwidedata

integration

Project

sponsor

CFO

CEO

VPsof

manufacturingand

finance

CEO

andCIO

CEO

andCFO

Project

leadership

andmanagem

ent

Project

leadership

comes

from

the

business

perspective

Businessprocess

manager

from

the

project

managem

entoffice

(PMO)oversees

process

standardisation

Full-tim

ecommitmentof

businessproject

managers

Project

leadership

aligned

withthe

businessowner

Experiencedproject

leader

with

reportinglineto

project

sponsor

Project

team

ERPproject

team

has

businessexperts

ITprofessionals,end-

users,andbusiness

process

managers

ITprofessionals,

businessleads,and

suppliers

ITprofessionals,

businessend-users,

consultants

Businessmanagers

transferred

Project

start

1996

1996

1992

1996

2001–2005:2006–

2009:US

Project

duration

10years

12years

9years

10years

4years

(global)3

years

(US)

Per

centERP-

supported

business

processes

100%

100%

100%

100%

100%

Extentof

customisation

Product

costing

Order-to-cash

Defence

contract

accounting

Broker

commissions

Order-to-cash

process

(continued)

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Table

2.

(Continued).

Firm

AFirm

BFirm

CFirm

DFirm

E

Skillsets

(IT)

Consultants

were

20–30%

ofthecost

ofim

plementation

Re-skillingofIT

inSAPsoftware

design

Consultants

with

expertise

Consultants

activein

requirem

ents

planningand

testing

Consultants

with

module-specific

expertise

are

critical

Re-skillingofIT

staff

Skillset(end-user)

Super-users

responsible

for

trainingand

support

Super

users

within

finance,

manufacturing,

helpwithongoing

training

Software

vendors

trained

super-users;

Super-users

trained

end-users

Trainingofend-users

withERPskills

Trainingofend-

users,including

change

managem

ent

Project

success(tim

e,cost)

Yes

1month

late;

$300,000over-

budget

(Asia-

Pacific)

130%

timeandcost

overruns

2monthslate

(first

phase)

Yes,met

scope,

time,

andcost

goals

Project

quality

(met

requirem

ents)

Yes

Met

requirem

ents,

use,andknowledge

Poorsupplier

quality

forchanges

Quality

targetsmet

(requirem

ents,

usability,end-user

learning)

Yes,met

quality

objectives


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Officer (CFO), and the project was justified in terms of cost-reduction and data andprocess integration.

5.1.2. Project leadership

Leadership for the SAP project came from the business side, and business expertswere responsible for leading the project. All of the firm’s business processes weresupported by SAP. Throughout the 10-year implementation process, no customisa-tion was allowed. Firm A selected SAP’s best practices and re-engineered businessprocesses to standardise the processes throughout the company.

Both IT professionals and end-users gained SAP skill sets. At the outset,consultants were hired to handle 20 to 30% of the cost of implementation. Overtime, the reliance on consultants was decreased. Super-users were responsible forend-user training and support within their respective functional areas, and end-usersachieved knowledge of ERP-supported processes. The project steering committeewas responsible for project governance and continuously reviewed the costimplications of the project.

5.1.3. Project success

In terms of project success, the project was completed on-time, on-budget, and metrequirements. Quality measures, including usability, maintainability, and usersatisfaction, were achieved. The actual business benefits were greater leveragedprocurement, greater efficiencies, and decline in headcount. System benefits were theincreased quality and timeliness of reports, easier audits, and data accuracy.

5.1.4. Lessons learned

The ERP implementation process at Firm A revealed a number of lessons, includingthe importance of effective training, top management support, including the CEO,and adherence to the project plan. One of the most effective change managementstrategies was to engage ‘super-users’ within functional business units in gainingacceptance within their respective business units. Business units with experienceimplementing SAP assisted new business units implementing SAP. Additional successfactors were the oversight role of the steering committee and the role of the championfor the project. As the project evolved over time, several changes occurred. There waslessened reliance upon external consultants, an increased role of the business units,and increasing steering committee review of the cost implications of the project.

5.2. Firm B

Firm B is in the specialty chemicals business, with a focus on seed and bio-tech.The company has 17,500 employees and $8.56 billion in sales. Beginning in 1996,Firm B initiated a corporate-wide SAP project to replace in-house developedlegacy systems. The project sponsor was the CEO. The business justification for theproject was operational excellence and business process integration. An integratedpackage could support worldwide business operations and replace division-levelsystems.

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The project was comprised of three phases, including:

Phase 1: 1996–2000 (Europe, Africa, North America).Phase 2: 2001–2004 (Latin America, Brazil).Phase 3: 2006–2008 (Asia-Pacific).

Firm B implemented one instance of SAP across its business units on a globalbasis. The target objective was to establish common business processes across theglobe by 2009. Firm B re-engineered business processes to fit the ‘best practices’supported by the SAP software. The only modification affected the unique order-to-cash process.


Project responsibility was aligned with the Project Management Office (PMO). TheSAP implementation was led by business process managers from the PMO who wereresponsible for overseeing process standardisation. The head of Global ERPreported to the CIO. Project team members included IT professionals, end-usersrepresenting functional areas, and the business process managers. The ERPsponsorship team served as the steering committee and approved ongoinginvestments, based upon return on investment (ROI).

Both IT professionals and end-users developed new skill sets. Developersgained extensive training and re-skilling in SAP software design andmethodology. Consultants provided specialised expertise (e.g. material ledger).Business analysts, with both business and technology knowledge, were critical tothe success of the project. Super-users within finance, manufacturing,and other functional areas assisted with ongoing training within their functionalareas.

As the project evolved over time, the role of the PMO in overseeing the projectwas formalised. There was lessened reliance upon external consultants and anincreasingly important role for the super-users. As SAP was migrated into differentcultures, understanding cultural issues became important to successful implementa-tion. To bridge cultural gaps, Firm C trained functional area specialists from remotelocations at their corporate headquarters in the United States, and then relied uponthese super-users to guide SAP users in international locations such as Thailand andSingapore.


The Asia-Pacific SAP implementation, originally slated for 13 months at a budget of$6.8 million, came in one month late and $300,000 over-budget. The project metrequirements, use, and knowledge expectations on the part of end-users. Businessmetrics were indicators of project success and included inventory turnover, on-timedelivery, highly disciplined processes, and real-time processes. From a systemsperspective, ERP projects provided more reliable systems, more accurate data, andreal-time data for decision-making.


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The ERP project at Firm B revealed some lessons learned. Given the globalimplementation of SAP, sensitivity to cultural issues was important to success. Datamigration was another critical strategy and meant importing critical data into theERP and assuring data quality. From a project management standpoint, effectivecommunications about project scope and objectives was critical. Implementation ofan effective change control system was necessary to handle scope changes.Additional success factors were similar to those in the other cases: leadership ofexperienced project managers, top management support, effective change manage-ment, and the role of the champion as a system advocate.

5.3. Firm C

Firm C is an aerospace-defence industry company. The firm’s integrated defencesystems (IDS) business is a $32.4 billion operation with 78,000 employees. IDSsupports 140 applications provided by 23,000 separate software contracts costing$250 million each year. As background, the information systems before ERP were aseries of legacy non-integrated mainframe systems.


The ERP project was initiated in 1992, and the first phase spanned 9 years (1992–2001), with an investment of $100 million. The overall investment in ERP was basedupon the business case (e.g. inventory turns). From a systems standpoint, the overallgoal in acquiring ERP was to reduce the overall number of systems and to reduce thecost of maintaining legacy systems. For example, Firm C had 16 differentprocurement systems before acquiring common procurement systems, including acommercial procurement system from Baan and a defence contracting system fromManugistics. This enabled them to reduce the number of procurement systems from16 to 5.

Firm C decided upon a best-of-breed solution because the company did not feelthat one ERP system could be used to integrate 140 different applications. Firm Cacquired a variety of commercial off-the-shelf software supporting differentapplications, including: procurement/manufacturing (Manugistics), commercialprocurement (Baan), financial (Oracle), and HR (Peoplesoft). Since the firm didnot want to change its processes to fit the best practices supported by a package, thecompany required the software vendor(s) to customise the ERP packages to meettheir unique business requirements, including defence contract accounting. As oneexecutive put it, ‘the company is not in the software business, so we have created apartnership with vendors who can meet our ERP software needs and work with us tomodify their packages to meet our needs’. The project sponsors were the VicePresident of Manufacturing and the Vice President of Finance.

Firm C pursued a best-of-breed approach, requiring its vendors to customise theERP software to meet its unique requirements, primarily defence contractaccounting. Over time, the goal was to use ERP software to implement ‘commonsystems’ across business units. The migration to a ‘common systems’ strategyoccurred because of the costs associated with customisation and maintainability ofcustomised solutions.

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The full-time commitment of ‘customers’ to project management was mandatedfrom the beginning. The original project team included 130 members, including 30end-users. Project leaders had extensive business knowledge in production,engineering, and operations and extensive project management experience. Projectleaders were the champions. Consultants were actively involved in requirementsplanning and testing. ERP software vendors provided training to super-users withineach business area, and the super-users become trainers within their respectivefunctional areas. A steering committee reviewed the business case for ERP andassured that investments in ERP were justified in terms of business results.


As mentioned, Firm C’s approach to ERP implementation was to contract withsuppliers for customised modules fitting its business process requirements. Initially,suppliers did not deliver software changes on-time and on-budget, and time and costoverruns approached 130%. Additionally, poor software quality delivered bysuppliers affected project success. As you can see from the lessons learned, aproactive supplier management strategy was developed to address these issues. Overtime, ERP implementation resulted in business and system benefits. From a businessstandpoint, new ERP-supported processes resulted in increased inventory turns,fewer material shortages, and increased productivity. Improved system maintenance,originally slated as a systems objective, was fulfilled.


One of the first lessons learned dealt with supplier management. Firm C’s ERPstrategy was to require its software vendors to customise the ERP software to meetits business process requirements. However, poor supplier performance to plan andquality issues resulted in project time and cost overruns and revealed the importanceof supplier performance management. Firm C instituted an aggressive series ofsupplier performance metrics and worked with its suppliers to achieve these goals.The firm provided incentives to its supplier to deliver on-time, on-cost. Suppliermanagement was supported by a well-defined scope of work, better estimates, morerealistic timeframes, and fewer changes.

The second lesson learned was underestimating the challenge of user acceptanceof process changes. Attempts to adapt packages to existing processes resulted inchanges, and changes resulted in time and cost overruns. As Firm C’s ERP projectevolved, the use of ERP software to implement ‘common systems’ across businessunits increased in importance. As a result, customisation was limited to specific‘must have’ processes (e.g. defence contract accounting). To manage change,management dealt with user resistance through education, continual reviews, andcommunications. Another critical strategy that contributed to the success of thebest-of-breed ERP approach over time was cost and outcome monitoring. Theinvestments in ERP, including customisation of ERP modules and buildinginterfaces across ERP systems, were continuously reviewed by a steering committeeto assure that these projects were achieving business results that justified theongoing investment.


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Critical success factors associated with Firm C’s ERP implementation echoedsome common themes: project leadership from the business side, top managementsupport, effective training, effective change management, and project steeringcommittee leadership.

5.4. Firm D

Firm D is a financial services company serving individual long-term investors. Thecompany has 33,000 employees and does $4.1 billion in sales. Prior to implementingERP systems, Firm D had financial and HR systems which had become obsolete.


In 1996, the ERP projects were initiated. The underlying business justification forERP was to achieve cost savings through business process integration. On thesystems side, data integration and the implementation of common systems wereobjectives. In phase one, Peoplesoft human resources (HR) and Peoplesoft financialsystems projects were completed in 15 months. Between 1996 and 2006, ERPmodules supporting HR, payroll, benefits, finance (general ledger, accountspayable), purchasing, and asset management were implemented. Overall, existingbusiness processes were re-engineered to fit the ERP software. Only the HR modulewas customised because of unique processes supporting brokers’ commissions. Thefirm believed that ERP enabled growth from 3000 to 10,000 branches. Seniormanagement, including the CEO and CIO, were the project champions.


Project management was aligned with the business owner. The financial systemsproject manager reported to the IS Director and CFO, reflecting a matrix structure.Of the 27 members of the project team, seven were user managers. At first, IT staffdid not have technical skills, but team members received technical training. At first,end-users did not have ERP skills, but team members received training in businessprocesses. Consultants with module-specific expertise were used to configure theERP modules to meet business requirements. The steering committee providedmonthly updates on project progress.


In terms of time and cost targets, the first-phase implementation of Peoplesoftfinancials and HR came in two months late. Overall, quality targets were met,including requirements, usability, and learning on the part of end-users. Businessgrowth was supported by the implementation of a timely payroll/personnel system.System benefits included timeliness of data and increased functionality.


The first-phase implementation revealed some lessons learned. The project went ‘live’early, and problems had to be fixed later. Insufficient testing led the way to theplanning and development of a testing centre. Some vendor consultants did not have

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application-specific expertise, but those with module-level expertise were consideredinvaluable to project success. Going forward, the senior project managerrecommended obtaining experts on ERP system modules and providing internalIT experts with software training. In retrospect, he stressed the importance of team-building, motivation, and team development. Effective training and communicationswith business users were a top priority. Leadership, team-building, and vision werecritical to project success, particularly because the project spanned a decade. Criticalsuccess factors were comparable to other projects: experienced project leadership,top management support, and role of the project steering committee in trackingproject results.

5.5. Firm E

Firm E is a $13.9 billion operation with 10,000 employees. Between 1996 and 2006,Firm E implemented Oracle financial ERP systems on a division-by-division basis.The Oracle projects were justified in terms of data integration and cost-reductionthrough the re-engineering of business processes. The Oracle financial modules werenot customised. Business processes were re-engineered to ‘fit’ the best practicessupported by the software.

In 2006, Firm E was acquired by a multi-national corporation. Its global parentcompany is the world’s largest food company, with $70 billion in sales, 511 factories,and 247,000 employees, including executives, managers, staff and productionworkers worldwide.


The global parent company initiated its worldwide SAP project, estimated at $3billion, in 2001. The SAP implementation was designed to force the confederation ofglobal businesses to operate as if they were a single unit. The business justificationfor the project was centralisation of financial controls and cost-reduction throughprocess re-engineering. The project’s systems goals were worldwide integration ofdata and elimination of legacy systems. The CEO was the project sponsor.

Between 2001 and 2005, the cutover to SAP was made in countries outsidethe US, including Latin America, Europe, Brazil, and Italy. Firm E became part ofa global SAP implementation, and initiated its SAP project in January 2006 with a36-month implementation plan. The budget was $1.14 billion. As with the earlierOracle ERP implementation, business processes were re-engineered to fit the bestpractices supported by SAP. Customisation was minimised, and only the order-to-cash process was customised to a limited extent. Throughout the project, the steeringcommittee provided monthly updates on project progress.


The project leader for the SAP project was the Chief Information Officer and cameto the project with over 10 years of successful experience implementing Oracle ERP.In terms of reporting line, the project manager reported directly to the ChiefFinancial Officer, who became the project sponsor for the US implementation. TheSAP project team had 300 members with 250 user managers, and 37 managers weretransferred from the business units for 3 years to accomplish the project.


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At the outset, IT professionals did not have ERP skill sets. Firm E obtainedconsultants who were specialists in specific application modules. At the outset, end-users did not have ERP skill sets, and they received training in software and businessprocesses. Training and change management were combined with each other tofacilitate organisational change. Training emphasised reporting, including customreport development, because of its importance to end-user management.


The SAP project in the US achieved success, in terms of meeting scope, time, and costtargets, and in terms of achieving quality objectives – requirements, usability, and end-user learning. Business objectives, including cost-reduction through standardised busi-ness processes, were achieved. Systems goals, including data integration, wereaccomplished.


The chief information officer and project manager for the US implementation ofSAP attributed project success to changing the business processes, focusing onproject scope, time, cost, and quality, and assuring data integrity. Changemanagement was the key to success, and the firm worked with a change managementconsulting firm to measure successful change management practices. Understandingcultural differences in international settings also facilitated effective change.

For Firm E, the early implementation of Oracle ERP provided background inproject management and control strategies which facilitated the implementation ofSAP as part of a global SAP project. The lessons learned from the Oracle ERPproject between 1996 and 2005 were transferable to the US implementation of SAPbetween 2006 and 2009. Critical success factors were: project manager expertise,training effectiveness, top management sponsorship, change management, andsteering committee leadership.

5.6. ERP implementation strategies in the case studies

The major dimensions of the case studies of ERP project implementation includedproject justification, project leadership and management, project characteristics,project scope, IT and end-user skill sets, and project success. The findingsdemonstrate the alignment of ERP with business goals, the importance ofexperienced project leadership, the commitment to business process re-engineering,and the growth of ERP skill sets on the part of IT professionals and end-users. Theseresults, shown in Table 2, set the stage for an investigation of alignment strategieswhich are discussed in greater depth in the next section.

5.7. ERP success factors

With respect to ERP implementation, the case studies revealed commonality withrespect to following the critical success factors associated with project success. Projectmanagement expertise, business alignment, training effectiveness, top managementsupport, existence of a champion, effective change management, and steering committeeleadership were all important to project success, as you can see from Table 3.

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6. Findings: alignment strategies

The alignment strategies which provide a theory base for the best practices revealedin the case studies include functional expertise, knowledge integration, liaisonmechanisms, project governance, and successful alignment of ERP and businessneeds. During the second round of interviews, questions relevant to each of thesealignment strategies were used to gather additional data. See Table 4.

Table 3. ERP success factors.

Firm A Firm B Firm C Firm D Firm D

Integration of ERP planning andbusiness planning

X X X X X

Full-time project manager X X X X XProject manager reports to seniormanagement

X X X X X

Project manager has extensive experience X X X X XEffectiveness of training X X X X XTop management support X X X X XExistence of a champion X X X X XMitigation of resistance to change X X Mod X XSteering committee X X X X X

Table 4. Alignment strategies.

Functional expertise 1. How was functional expertise gained for the project?2. What roles do functional area managers play in project

initiation, requirements definition, and post-implementationsupport?

Knowledge integration 1. What strategies were used to create shared knowledge amongIT professionals and functional area managers on the team?

2. What are the key skill and knowledge sets for IT professionals?3. What are the key skill and knowledge sets for functional

area managers?Liaison mechanisms 1. What liaison mechanisms were effective in facilitating

knowledge integration and teamwork among IT professionals,consultants, and functional area managers in the ERP project?

2. Were these liaison mechanisms formal or informal?Project governance 1. What was project governance established?

2. What governance responsibilities contributed to effectiveproject control?

3. What organisational changes were used to facilitate ERPsystem acceptance (reward system, change management)?

4. How did others feel about the changes?ERP scope andintegration

1. What is the impact of ERP scope and integration on alignmentof ERP and business needs?

2. What strategies were used to assure this ‘fit’ and alignment?3. Comparing the way your organisation operates and the ERP

processes, to what extent did the ERP system meet yourrequirements?

4. What are examples of mismatches? How did they surface?How were they resolved?

5. Have there been improvements in work processes with ERPimplementation?


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6.1. Functional expertise

Business leadership was essential to each of the ERP projects, because of theimportance of functional area expertise. In one case (Firm A), a ‘business leader is incharge, so that project leadership comes from the business perspective’. ‘Businessanalysts, with both business and technology knowledge, are critical to projectsuccess’ (Firm B). The ‘full-time commitment of customers (e.g. end-user managers)to project management was a requirement, because project managers have extensivebusiness knowledge in Production, Engineering, and Operations’ (Firm C). ‘Projectmanagement was aligned with the business owner,’ noted a project manager (FirmD). Similarly, the ‘SAP project team has 37 functional area managers who havebeen transferred from the business units for three years to accomplish the project’(Firm E).

6.2. Knowledge integration

One of the most interesting alignment strategies was the use of leaders with sharedbusiness and ERP knowledge to perform leadership roles in managing the ERPprojects. This strategy was a knowledge integration strategy. In one organisation,‘business units with experience implementing SAP assist new business unitsimplementing SAP’ (Firm A). In two other firms, ‘super-users within finance,manufacturing, and other functional areas help with ongoing training’ (Firm B),and ‘super-users within each functional area were instrumental in providingtraining in business areas’ (Firm C). By having the project manager on aPeoplesoft financials project report to both the Information Systems Director andthe Chief Financial Officer, the reporting line supported a knowledge integrationstrategy (Firm D). Another alignment strategy was the role of a seniormanagement champion, responsible for communicating project goals andadvocating the project effectively within the organisation. ‘The champion, theChief Financial Officer, had both line business experience and corporate cultureexperience’ (Firm E).

The role of consultants was also indicative of knowledge integration. At theoutset of ERP implementation projects, consultants with application module-specificexpertise were brought in to handle configuration, testing, and implementation. Butover time, this context-level expertise was acquired by internal business analysts, andfewer external consultants were used (Firm A, Firm B, Firm C).

6.3. Liaison mechanisms

Within several organisations, liaison mechanisms were alignment strategies whichenabled the organisation to achieve a fit between ERP and business needs. Theseliaison mechanisms provided a mechanism for functional area managers to adoptstandardised, common business processes. In one firm (Firm B) the role of businessprocess manager was created to oversee process standardisation across multiplebusiness units. The over-arching goal was to standardise global processes (e.g. ‘sothat Materials Management processes at a division in Thailand were the same as theMaterials Management processes in Brazil, China, and the United States’). Thebusiness process manager role, part of the PMO, was responsible for organisation-wide process standardisation.

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6.4. Project governance

Project governance processes supported business alignment of the ERP projects byestablishing a mechanism for assuring that ongoing investments in ERP supportedmeasurable business outcomes. Project governance was led by a steering committee.The role of the steering committee was pivotal in measuring the business impact ofenterprise systems. A ‘steering committee continuously reviews the cost implicationsof the project’ (Firm A, Firm B, Firm C, Firm D, Firm E). Steering committeeresponsibilities included ‘approving ongoing investments’ (Firm B), ‘reviewing theongoing impact of the project on achieving business results’ (Firm C), and ‘reviewingmonthly updates on project progress’ (Firm E).

6.5. Scope and integration

To a large extent, ERP implementation supported common processes across businessunits in the firms studied. Implementation of standardised, common processes is astrategy for cross-functional process and data integration. Unique processes werecustomised, but as a rule, project leaders recognised the value and practicality ofimplementing vanilla processes. As you can see from Table 5, the majority of theorganisations tried to implement standard processes supporting the ‘best practices’of the ERP system they were implementing.

7. Discussion

Without question, the common element among the case studies was alignment ofERP with business needs and business strategy. Some unique processes were custo-mised to sustain competitive advantage, which addresses the issue that implementingcommon processes can undermine competitive advantage (Davenport 1998).

In terms of alignment strategies, steering committee leadership was important inthe strategic alignment process and to establish business case for ongoing investmentin ERP. Project management discipline, including the new role of the processdesigner, was the key to business process re-engineering and process standardisationand cross-functional process integration. Functional business area leadership, topmanagement leadership, and knowledge integration were key factors in business

Table 5. Scope and integration of ERP.

Scope of ERP implementation Customisation of ERP

Firm A Implemented vanilla processesfor FI, SD, PP, MM, PM, HR,and quality management

Product costing process

Firm B Implemented vanilla processesfor FI, SD, PP, MM, PM, HR, CO

Order-to-cash process

Firm C Implemented common processesusing a best-of-breed vendor approach

Customised unique defencecontract accounting process

Firm D Implemented vanilla processes forfinancial and human resources

Broker commission process

Firm E Implemented vanilla SAP processesacross-the-board

Order-to-cash process


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process re-engineering and change management. Super-users in business units wereinstrumental in training and change management. An interesting human resourcesperspective revealed the importance of business knowledge and technical knowledge.The job role best representing the skill set needed for success in ERP was a businessanalyst with cross-training in technology and business.

8. Limitations

It is difficult to get actual hard data on return on investment due to cost-savings,inventory reduction and streamlined processes, since this information is confidential.The interviews were conducted with project managers at the corporate offices of themulti-national companies, and it would be interesting to interview country-levelmanagers to see if there are alignment issues related to cultural differences inbusiness practices from their vantage point. This study does not show impactsdealing with local cultural differences since all of the case studies involved multi-national implementations led on a global basis with centralised decision-making.

9. Future research

In the future, there are many opportunities for follow-up research. It would beinteresting to obtain follow-up data on ERP benefits by assessing the importance ofeach of these benefits, and also the extent to which each of these benefits was actuallyachieved. In other words, if a benefit is unimportant, but it is achieved, then whatdoes this mean?

Another research opportunity is to obtain information on human resourcesstrategies and their contribution to alignment. What are the leadership profiles ofsuccessful vs unsuccessful ERP project leaders? What are the skill sets for effectivebusiness analysts? Are business analysts groomed from the functional side or fromthe IT side? What training and development strategies are instrumental in developingbusiness analysts?

The issue of the impact of process designers was introduced in this study. Itwould be interesting to compare an organisation with process designers vs onewithout process designers in terms of ERP success factors.

Finally, a study of multi-national ERP implementation with decentraliseddecision-making and management would reveal the impact of decentralised decision-making on ERP strategy. Understanding how the best of breed approach contributesto alignment offers additional research questions and opportunities. It would beinteresting to follow case studies over a period of time to see if ‘vanilla’ ERPimplementations transition into best of breed implementations.

10. Summary

The case studies of ERP implementation provided insight into alignment strategieswhich are supported by theory. Specifically, alignment strategies included usingproject leaders with functional area expertise, facilitating knowledge integration,establishing liaison mechanisms, and implementing project governance to assure thatinvestment in enterprise resource planning systems achieved business goals. Finally,alignment strategies supported project scope that facilitated data integration andprocess standardisation across the enterprise.

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Appendix. ERP project interview form

Part 1: ERP project information

(1) Project management/leadershipProject sponsor� Project organisation

& Project manager& Number of full-time project team members& Number of full-time team members from business units� Stakeholders� Project charter: Is there a project charter?

(2) The justification for the ERP decision� Business benefits: What business metrics were supposed to go up or down as aresult?� Systems benefits: What systems metrics were supposed to go up or down as aresult?

(3) Project characteristics� Project scope/budget estimate� Project scope/budget actual

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Part 2: Project timeline

� Project start date� Project phases (for each phase)

& Start date& Expected completion date& Actual completion date� Trend line of project activities� Did scope changes impact time and cost during the project and its phases?

Part 3: Lessons learned

(1) Common mistakes checklist(2) Symptoms� Lack of strategic alignment?� Lack of stakeholder involvement?� Poor planning?� User resistance?� Insufficient training?

(3) Recommendations for the future

Part 4: Project risk assessment

(1) Actual percentage of business processes affected by the ERP system.(2) IT skill set (Did IT staff have relevant ERP skills?)(3) End-user skill set (Did users have relevant ERP skill sets?)� Knowledge of business processes?� Knowledge of technology?� Other

(4) Customisation (Which processes were customised? How much has been spent oncustomisation in terms of time/budget?)

Part 5: Evaluation of ERP Project Success

(1) Time: Did the ERP project come in on schedule?(2) Cost: Did the ERP project come in on budget?(3) Product: Did the ERP project produce a system of acceptable quality and a system

which meets specifications, including: requirements, usability, ease of use, modifia-bility, maintainability

(4) Use: Is the ERP system being used by its target constituencies?(5) Learning: Did the ERP project increase stakeholder knowledge and help prepare the

organisation for future challenges?(6) Value: Did the project result in improved efficiency and effectiveness for the

organisation? Are there measures of project success using any of these metrics:NPV, IRR, EVA, balanced scorecard?

(7) Business benefits: What business metrics have gone up or down as a result?(8) Systems benefits: What systems metrics have gone up or down as a result?

Part 6: Questions regarding the success factors for ERP Implementation:

(1) What is the integration of ERP planning and business planning?(2) Is the ERP project manager solely responsible for the management of the project?(3) Does the ERP project manager report to the business unit s senior manager?(4) Does the ERP project manager have extensive experience?

(a) Project management experience?(b) ERP experience?

(5) What is the overall effectiveness of training, in terms of quantity and quality?


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(6) What is the level of CEO involvement?(7) Is there a champion?(8) To what extent is management effective in reducing resistance to change?(9) Does a project steering committee (headed by the CEO) meets on a regular basis

(every month)?(10) What other factors are associated with project success?

448 M.R. Sumner

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how alignment strategies influence erp project success

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