ERP Implementation Failure Factors in Government Sector: UAE Case Study
Khaleifah M. Al Zeyoudi
Information Technology Master Program College of Information Technology, Zayed University, Dubai, UAE
Introduction
Enterprise resource planning (ERP) systems have gained high trends in UAE as many organizations have adopted ERP solutions. The significance of ERP implementations is due to its holistic nature and to the need to integrate organizations business processes, improve enterprise, resources allocation efficiency, and collate data to support decision making within organizations (Klos & Krebs, 2008). ERP is software package that integrate organization departments, resources, activities, and coordinate business processes across organizations onto a centralized production environment. ERP provides real time access to enterprise data, a feature that enables top management to evaluate the overall performance of their organizations in terms of resources utilization and provision of reports for any given period of time during the year. The ERP package includes different modules such as financial modules, human resources modules, operation and logistics, and sales and marketing (Ala'a, Heeks, 2010). For projectdriven organizations, the ERP implementations provide benefits such as cost reduction, optimal utilization of resources, improved productivity, processes reengineering, and better managerial decisions making (Parthasarathy, Anbazhagan, & Ranachandran, 2006). According to ARC advisory group, the ERP market continues to grow at an annual growth of 6.7%, that in 2011 it is expected to reach 24 billion dollars value (Perkins, 2007). ERP market growth is driven by many factors including, the enormous demand from emerging markets (Perkins, 2007). Over the last decade many UAE-based organizations had realized the important role that ERP play in business. Therefore, many have started adopting the different available solutions. In spite of the lengthy and complicated process, many of these implementations have reported as unsuccessful implementations. Numerous reports and researches have studied ERP implementations, its success factors and strategies, and have identified the associated critical issues, but none have evaluated the empirical studies of these failures in UAE so far. This research sets out to address the causes of failed ERP implementations in UAE. Following the literature review used to explain the ERP failures, a case study of ERP failed implementation is used. In depth analysis of risk factors is conducted, which lead to recommendations to avoid the failures.
Literature review
According to Ala'a Hawari and Richard Heeks, staff members in university of Manchester, ERP is defined as "a software system with integrated function for all major business functions across
an organization such as production, distribution, sales, finance, and human resources management" (2010). No wonder that global CIOs, according to Morgan Stanley, have identified the adaption of ERP, and performance of ERP systems as one of top five IT priorities (Togur, Bloomberg, and Morgan, 2003). The incorporation of ERP systems and organization's business processes is considered as one of critical success factors of ERP implementations (Holland, and Light, 1999). Such Incorporation is believed to be achieved via customization approach. Meanwhile, customization of business processes is two edges weapon. Recent studies have obscene that as the customization of business processes increase, the less the performance of ERP will be (Parthasarathy, Anbazhagan, & Ranachandran, 2006). In addition, technical changes have to be re-implemented with each ERP suite release that leads to increased maintenance costs of the system (Hong, and Kim, 2002). ERP solutions designs assume a set of organizational processes that in compliance with best practices (Davison, 2002). But in reality, business processes are different from the expected. The duplications of processes cause delays and reworking of processes which in turn results in an efficiency issues (Alaa, 2010). The absence of clear organizational objectives and values can be considered as the sin committed by the by stakeholders and organization management. The unstated objectives and the lack of awareness of ERP turnovers such as cost reduction, faster transactions, and increased revenues cause the resistance to the project. The resistance to the project is seen as managers are happy with their legacy systems because it represented to them a source of power, and influence and considered as threat to the jobs of the rest of the employees (Alaa, 2010).
Research Question: What are the failure factors that are associated with ERP implementations in UAE-based organizations?
According to the reported empirical findings of many researchers many failure factors were identified such as, the lack of top management support toward the implementation initiative, along with loss of key users, and poor project management skills. The higher rate of customization to ERP package causes the loss of system capabilities. The lack of interdepartmental collaboration is due to the rejection of ERP solutions by the users, and their tendency to stick with their legacy systems. The interconnection between the failure factors is apparent in this paper, as each of these factors is discussed.
Research Methodology
Both literature review and case study approach methodology are adopted in this paper. The case study chosen is for a governmental department Alpha that experienced a failed ERP implementation recently. A combined analysis of organizational records and observation of implementation, through its initial stages till go-live, is conducted. The failures factors are to be addressed and analyzed thoroughly.
Exploratory Case Study
The high rates of ERP failure implementations and difficulties have been studied and addressed in the literature (Davonport, 1998). A case study about a governmental department Alpha in UAE, who has experienced a failed ERP implementation, was chosen to study the causes and the lead factors resulted into the failure. A government department Alpha is an organization, which is in-charge of the provision of a comprehensive IT infrastructure among other 14 local departments, business process reengineering, leveraging governmental operations levels through the implementation of ERP services, and establishing e-services. In mid-2008 the department decided to adopt Oracle ERP solution based on the need for standardized business processes among departments, the widerange of daily operations, the need for efficient allocations of government resources, and facilitation of decision making through the process of information gathering and analysis. As the department Alpha vision was toward implementing ERP solution. The project implementation originally started in November 2008 and was planned to be live by mid-2009, with financial, HRMS, and inventory modules, across the local departments. The parallel-run with old legacy systems continued till May, 2010. The Implementer prepared a package of about 40 customized reports to be delivered before go-live stage. Meanwhile, a number of key users from each department with the required background and expertise were assigned for each module. The non-availability of some key users of the implemented modules, due to resignation, was one of the main constraints for the project. Thus, in some cases to deal with shortage of key users, the end users were assigned responsibilities usually undertaken by key users. At this stage the quality of project process was jeopardized. The end users assigned as replacement of the resigned ones propagated an issue for not being involved in the project from the very start, which led into negating the processes ownership and changes authorization. Meanwhile, most of top management from other departments tends to delegate the supervision of an ERP implementation to management levels staff below them. That resulted in the lack of understanding of the project scope, and technical aspects. Subsequently, the required commitment of allocating time and resources for the project was not there.
Data Analysis and Findings Poor Top Management Support
Srivastava emphasizes on the criticality of having executives support toward the ERP initiative, and upon consider that as one of the important requirements of the implementations (2003). Organizations that are looking forward into implementing ERP solutions must see the ERP implementation as a transformation in the way of achieving strategic goals. Therefore, a strong commitment to the implemented system and active participation in the implementation process is required (Bernard, 2005). The top management in our case study had the tendency to assign the
follow-up and decision making responsibilities to the line-managers below them, which adversely impacted the initiative.
Poor Project Management
The ability of project managers to develop a high level detailed project management plan is crucial factor to ensure the success of the ERP implementation (Bernard, 2005). But, when the managers realized how big the scope, size, and complexity of an ERP implementation is, then their ability to initiate the detailed project plan is compromised (Srivastava, 2003). In addition, the project managers in our case study were not able to initiate risks mitigation strategies, or to implement counter corrective actions for the forecasted risks. For instance, the risk mitigation strategy to train back-ups of key users didnt exist. As a result, the implementation had a high likelihood of failure.
Higher Rate of Customization
The ERP solutions need to be changed, in another word customized, to fit with organizations existing or re-engineered business processes (Parthasarathy, Anbazhagan, & Ranachandran, 2006). Though, as the higher rate of customization deviate the organization from achieving the implementation goals, it must be avoided. Customization is costly process and lengthy that could lead into schedule slippage, as they need more deployments in development environment before consecrating them valid (Parthasarathy, Anbazhagan, & Ranachandran, 2006). The amount of customization, which has been deployed to system processes, and reports, resulted in moving away from ERP package benefits.
Lack of Interdepartmental Communication and Collaboration
Business processes may require repetition due to miscommunication and interpretation of business requirements (Bernard, 2005). Therefore, promotion of common and central approach within the organization will help reducing the misinterpretations of the requirements. As the staff involved in the initiative start meeting in the related ERP activities, or meetings that are conducted on regular basis, the opportunity to share concerns, and provide support and advice increase.
Loss of Key Users
Enterprise resources planning systems are high trend projects that require dedicated resources like system architects, developers, analysts and programmers (Bernard, 2005). The loss of these skills from the implementation team can create major impacts that result in implementation slippage, and additional costs. A mean to avoid that is to train additional resources and to ensure their full engagement from the early stages of the implementation initiative (Bernard, 2005). The failure to meet this goal in Alpha caused a major delay in the implementation schedule, while they were looking for additional resources to fill the gaps, and to substitute for the resigned personnel.
Conclusion
Enterprise System implementation projects involve integrating different business segments and resources. The absence of effective project management at the project is a major cause of the implementation failure (Srivastava, 2003). Resistance to change and to move from the old legacy systems into the ERP is caused due to the absence of the top management involvement and commitment to implementation process, poor communication between teams, and the absence of organization visions. All the given factors resulted in an ERP implementation failure at Alpha. From the addressed failure factors identified in the paper, a conclusion that the need to define an effective ERP implementation plan, draw a vision of organizations goals and objectives, key users back-ups training and maintain professional organizational communication are the remedies for failed ERP implementation projects.
References
Davonport T.H., (1998). Putting nterprise into the enterprise system, Harvard Business Review. Holland C. P. and Light B., pp. 30-36, (May/June, 1999) A Critical success factor model for ERP implementation, IEEE Software. Hong K and Kim Y, vol. 40, No. 1, (2002). The Critical success factors for ERP implementation: An organizational fit perspective, Information Management. Ranu Srivastava, (2003). Learning from Failed ERP implementation or How to make em Successful. Scott A. Bernard, (2005). An Introduction to Enterprise Architecture: Linking Business and Technology. Slawomir Klos, Irene Krebs, (2008). Methodology of ERP System Implementation: A Case Study of Project-Driven Enterprise. S. Parthasarathy, N. Anbazhagan, Muthu Ramachandran, (2006). An Exploratory Case Study on Performance Enhancement of ERP Projects. Susan Perkins, ARC Advisory Group, (2007). Enterprise Resource Planning Worldwide Outlook, Five year market analysis and technology forecast through 2011. Togur D M., Bloomberg, Morgan Stanley E., (2003). CIO Survey Series: Release 4.5, Morgan Stanley Research Report.
