Critical success factors of enterprise resource planning systems implementation success in vietnam

Researchbackground

Forthelastfewdecades,businessmanagementstronglyreliesonthei nf o rm at ion TheuseofManagementInformationsystem(MIS)isbeingprovedtol e a d t obetterplanning,betterdecisionmakingandbetterresult.MISisdefinedbyDavisa ndOlsen(1985)asanintegrateduser- machinesystemforprovidingi n f o r m a t i o n tosupportinformationmanagem entanddecisionmakingfunctionsina n o r g a n i z a t i o n T h i s s t u d y w i l l l o o k i n t o o n e o f t h e m o s t a d v a n c e d a n d sophisticatedMIS,theEnterprisePlanningSy stem(ERP)andthecriticalsuccessf a c t o r s foritssuccessfulimplementation.

Generally,ERPsystemshelporganizationsincreaselevel of customerse rvice,productivity,costreduction,inventoryturnoverandprovideeffectives u p p l y c h a i n m a n a g e m e n t a n d e - c o m m e r c e T h e E R P s y s t e m s a r e d e s i g n e d t o d e v e l o p plansandsc hedulessothattherightresources(manpower,material,m a c h i n e r y andmoney)area vailablein the right amount when needed(WallaceandKremzar,2001).

Inreality,ERPimplementationiscostly,complicatedandtime- consuming.A c c o r d i n g tosurveyresultin2010byPanoramaConsultingGroup,o naverage,anE RP project takes abo ut 18.4monthswith totalcostof $ 6 2 mil.

51 4%of E R P projectsexceedbudget,35.5%ofprojectstakelongerthanex pecteddurationand4 0 % ofcompany facewithoperationaldisruptionafter“golive”.Inextremecases,companieshaveevenhadtoclosebecauseofvastERPinvestmen tsthatdidnotgol i v e , a n e x a m p l e b e i n g t h e F o x M e y e r D r u g C o m p a n y t h a t e n d s i n t o b a n k r u p t c y ( S c o t t andVessey,2002).

In developing Asian countries, the adoption rate of ERP systems has been significantly low, trailing behind that of advanced nations (Rajapakse & Seddon, 2005; Ngai et al., 2008) In Vietnam, ERP systems are relatively new, gaining attention primarily after the country's accession to the WTO According to information from ERP forums, approximately 81 corporations in Vietnam have implemented ERP systems However, there is a lack of specific statistics or numerical analyses regarding the success and failure of these projects, as well as the costs associated with achieving an effective ERP system Overall, the effectiveness of ERP implementation in Vietnam remains low, with many businesses adopting ERP systems but not realizing their full potential.

’tusedupcapacityofthesystem.Mostofthemonlyc o m e t o a h a l t att h e l e v e l o f c o n t r o l T h e s e b u s i n e s s e s c a n a p p l y l i t t l e o f p la n n i n g feature,whileitisth eprominentfeatureoftheERP.

The high failure rate and challenges in implementing ERP systems have drawn significant research interest in identifying critical success factors for ERP adoption globally Ngai et al (2008) noted that existing research primarily focuses on developed Western nations, highlighting a gap in studies regarding ERP success or failure in developing regions This study aims to explore the critical success factors (CSFs) influencing the successful implementation of ERP systems in Vietnam.

Researchquestionsandobjectives

There’snodoubtaboutthebenefitsthatERPsystemsbringtoorganization.H o w e v e r , t h e r e a r e s t i l l m a n y i s s u e s r e l a t i n g t o E R P i m p l e m e n t a t i o n w h i c h c a n becomepotentialrisksforERPprojects.Theresearchaimstoanswertothef o ll owin g question:

Question3:Doesorganizationalculture enhance therelationshipbetween criticalsuccessfactorsandERPimplementationsuccess?

Thiss t u d y i s c o n d u c t e d t o i d e n t i f y f a c t o r s i n f l u e n c i n g E R P i m p l e m e n t a t i o n success.I t s e e k s t o examinea n d u n d e r s t a n d w h e t h e r f a c t o r s s u c h a s t o p management support,teamworkand composition, e nterprise- widecommunication an d projectmanagementinfluencesuccessofERPadoptio n.Italsoseekstoexaminew h e t h e r o r g a n i z a t i o n a l c u l t u r e p o s i t i v e l y moderat est h e r e l a t i o n s h i p b e t w e e n thesefactorsandERPimplementationsuccess.Thespecif icobjectivesare:

- Toe x a m i n e t h e moderatinge f f e c t o f organizationalc u l t u r e o n t h e r e l a t i o n s h i p betweentopmanagementsupportandERPimplementatio nsuccess.

- Toexaminem o d e ra t i n g effectoforganizational cultureont h e relati onshipb et we en teamworkandERPimplementationsuccess.

- Toexaminem o d e ra t i n g effectoforganizational cultureont he relati onshipb et we en enterprise-widecommunicationandERPimplementationsuccess.

- Toexaminem o d e ra t i n g effectoforganizational cultureont h e relati onshipb et we en projectmanagementprogramandERPimplementationsuccess.

TheresultsofthestudyarepracticallymeaningfulforimplementationERP systemsinVietnam.Thestudyhelpsorganizationtomasterthemainfactorsi n f l u en ci n g thesuccessofERPimplementation.Theresultsofthestudyw i l l p rovi de necessary measurestoimprovethesuccessrateofadoptingERPsystems,w h i c h resultsinimpr ovementinperformance andcompetitioncapability.Thestudywil l alsoenrichnecessaryknowledgeforpeople whoareworkingthefieldofERPaswellasthosewhoareimplementingorwillimplement ERPsystems.

Basedo n t h e l i s t o f c o r p o r a t e thath a v e i m p l e m e n t e d E R P s y s t e m s , t h e authora t t e m p t s t o c o n d u c t t h e s t u d y i n t w e n t y f i v e c o m p a n i e s i n H o C h i M i n h , BinhDuongandDongNaiwith“golive”ERPsystems.

Thestudyisconductedin2phase:pilotstudyandmainstudy.Thepurposeof p i l o t testis totestt h e co nt en t as w e l l as the measuremento f s c a l e s Thent he m ainstudyistotestthehypothesesandresearchmodel.

Qualitativemethod:Theauthorwouldusethequalitativemethodbycarryin goutgroupdiscussionswithfiveexperiencedpeopleworkinginthefieldofE R P b u s i n e s s T h e p u r p o s e o f t h i s s t e p ist o a d j u s t a n d amendt h e t r a n s l a t e d q u e s t i o n n a i r e suitablewiththesubjectsandpurposesofthestudy.

Quantitativemethod:Quantitativestudywouldbecarriedoutbasedonthed a t a collectedfromthequestionnaire.Quantitativestudyisimplementedtoevaluatet h e scale,verifythetheoreticalmodel.The scaleispreliminarilytestedther e l i a b i l i t y and validityusingCronbachalphaandexploratoryfactoranalysiscarried outbytheSPSS20.0software.Multiplelinearregressionanalysisandhierarchicalr e g r e s s i o n wouldbeusedtotesttheproposedmodelandthehypothesesofthestudy.

Introduction,mentionsaboutresearchbackground,researchobjectivesa n d re searchscopeandapproach.

Chapter5 - C o n c l u s i o n a n d i m p l i c a t i o n , isaboutt h e r e s u l t s , i m p l i c a t i o n , a n d reco mm en dation forfutureresearch.

Thisch ap ter pr ese nts th et heo ri es b e h i n d E R P cr it ica l s u c c e s s I t w i l l als odiscussa b o u t m e a s u r e m e n t f o r E R P i m p l e m e n t a t i o n s u c c e s s T h e r e s e a r c h frameworkandhypotheseswillalsobeproposedinthischapter.

Kumare t a l ( 2 0 0 0 ) d e f i n e e n t e r p r i s e r e s o u r c e p l a n n i n g ( E R P ) s y s t e m s a s “configurableinformationsystemspackagesthatintegrateinformationa ndinformation- basedprocesseswithinandacrossfunctionalareasinanorganization”.ERPsystemsar eexpensive,andonceERPsystemsareimplementedsuccessfully,si gn i f i c a n t benefitssuchasimprovedcustomerservice,betterproductionscheduling,andreduced manufacturingcostscanbegained.

Inventorymanagementandcontrolisaco mbinationofinformationtechnologyand businessprocessesino r d e r tomaintai ntheappropriateratioinawarehouse.

P )softwareapplicationsusedforplannin gandtenderingprocesses.MRPplans foractivitiesandpurchaserawmaterials basedonproductionrequirements,cur rentinventorylevelsandproceduresfor eachactivity.

MRPIIapplicationsusingsoftwaretoco ordinatetheproductionprocess,includin garangefromproductplanning,partsp urchasing,inventorycontroltoshippingf inishedgoodsanddistribution.

IntheenterpriseresourceplanningorER P,softwareapplicationsusedf orthatpur pose,toimprovetheperformanceofinte rnalbusinessprocesses.Modernintegr atedERPbusinessonbodyfunctions,i ncludingplanning,inventory,purcha sing,distribution,salesandtrackingord ers.ERPsystemsmayincludeapplicati onmodulestosupportotherbusinessfu nctions.

ERPhasdevelopedfurthertoincludepo werfuldataprocessingan d reportingen gines,createingrealtimereportingforbu sinessusers.

(http://www.sysoptima.com/erp/history_of_erp.php)

Initially,manufacturingsystemsemphasizedoninventorymanagementa ndc o n t r o l M o s t o f s o f t w a r e p a c k a g e s w e r e i n d i v i d u a l l y de si gne d a n d d e v e l o p e d t o automateinventory.Since1970s,thesoftwarepackagesweredeve lopedandextendedto MaterialRequirementPlanning(MRP andMRP II).Inthe early1990s,

MRPI I w a s fu rt he re xt en ded to someo t h e r a r e a s , su chas Fi na nce, E n g i n e e r i n g, HumanResource,ProjectManagementetc.,and theterm

Consideredasthemostimportantdevelopmentinthecorporateuseoftechnolog yinthe1990s,ERPhas beenundertakenbymanyorganizations.Generally,E R P systems n o w a d a y s c o m p o s e o f s e v e r a l modules,s u c h a s humanr e s o u r c e s , sales, marketing,financeandproduction,providingcross- organizationalintegrationoftransaction- basedd a t a m a n a g e m e n t t h r o u g h o u t e m b e d d e d b u s i n e s s p r o c e s s e s supp ort.

Figure2.1:ModulesofERPsystem(www.abouterp.com)

(2000),criticaltoorganizationalperformanceandsurvival.ERPsystemscanpoten tiallyallowacompanytomanageitsbusinessb e t t e r withpotentialbenefits ofimprovedprocess flow,betterdataanalysis, higherq u a l i t y datafordecision- making, reduced i n v e n t o r i e s, improvedcoordination throughoutthesu p p l y chain,andbettercustomerservice(Gattiker a n d Goodhue,

Halletal.,2004;Gupta,2000;Fanetal.,2000).Moreover,Zhengeta l

( 2 0 0 0 ) s u g g e s t t h a t E R P s y s t e m s i m p r o v e t h e e f f i c i e n c y o f ma nagementd e c i s i o n s andplansandincreasetheflexibilitywithadjustmentsoffuncti onalitytor e a c t t ob u s i n es s nee ds w h i l e H uan g a n d P a l v i a ( 2 0 0 1 ) s u g g es t t h at E R P he lp s a m an u f ac t u r er oraservicebusinessmanagetheimportantpartsofitsbusi ness.Alloft h e b e n e f i t s c a n h e l p i m p r o v e p r o f i t margins( F a n e t a l , 2 0 0 0 ) B usinesseshaveb e e n quicktoembraceERP.WillisandWillis-

( 2 0 0 2 ) andAdamandO’Doherty(2000)suggestthatERPwillcontinuetobeon eoft h e fastestgrowing an d i nf lu en ti al players i nthe ap pl ica ti on software in dus tr y throughtothenextdecade.

After1 9 9 0 s , manyc o m p a n i e s i n t h e w o r l d h a v e b e e n i m p l e m e n t i n g E R P systemstohaveauniforminformationsystemintheirbusiness.InVietnam, ERPa p p e a r e d in1998.However,theapplicationandconstructionofERPine nterprisew as developedin2002.Thenumberofmorethan80enterprisecompanieswith“ gol i v e ” E R P s y s t e m s i n d i c a t e s t h a t t h e s t a t u s o f

E R P a p p l i c a tion inV i e t n a m e s e enterprisesisverylimited.Mostofbusinessesarestillnotawareofth eimportanceo f ERPaswellastheirmaterialandtechnicalbasisandfinancialreso urcearenota d e q u a t e toimplementERP.Someenterprises,whichprovidedERPsolu tion,r e c o g n i z e d thatthenumberofexpertsinthisfieldinVietnamisquitelow.

In2006,OraclewastheonlyERPsolutionproviderforthewholemarketofs m al l andmediumenterprisesinVietnam.However,untilnowmostofleadingERPsolutionprovi dersi n t h e w o r l d h a v e a p p e a r e d i n V i e t n a m e s e m a r k e t , i n c l u d i n g f amousonessuchasSAP,Tectura,Atos,Soltius,IBM MostERPvendorhave p a r t n e r s h i p withVietnamesecompaniesinorderprovideERPsolutiontoend- users.F P T seemsbethebiggestERPproviderwhohavepartnership withmost ofERPv e n d o r

UntilFebruary2011,therewereabout80Vietnamesecompaniesthatalre adya d o p t e d E R P systems,a n d t h e n u m b e r w a s a n t i c i p a t e d t o i n c r e a s e s i g n i f i c a n t l y Thisresultcamefromareportreleasedonthewebsitehttp:// eac.vnonMarch2011whichwasattachedinAppendix1attheendofthisresearch.

Untilthepresentmoment,therehasn’tbeendetailedstatisticsonthesuccesso r f ai lu r e , thecostaswellaseffectivenessofERPsystemsinVietnam.Howevering e n e r a l , theeffectivenessofERPimplementationinVietnamhasn’tbeenhighyet.Agreatnu mberofbusinesseshaveimplementedERPbuthaven’tusedupcapacityo fthesystem. Mostofthemonlyreachto thelevelofcontrol.Thesebusinessescanap p l y littleofplanningfeaturedespitethef actitistheprominentfeatureofERPsystems.

AccordingtoAmberg(Ambergetal,2005),thefirstauthorwhodevelopedt h e c o n c e p t o f c r i t i c a l s u c c e s s f a c t o r s ont h e b a s i s f o r d e t e r m i n i n g i n f o r m a t i o n needsofmanagersis D a n i e l (1961).T h e n , t h e idea was p o p u l a r i ze d byRockart( 1 9 7 9 )a n d h a v e b e e n w i d e l y u s e d i n t h e i n f o r m a t i o n system.“CSFsa r e t h e limitednumberofareasinwhichresults,ift h e y a r e satisfactor y,woulde n s u r e competitiveperformancefortheorganization.They arefewkey areaswherethingsmustgorightforthebusinesstoflourish”(Rockart,1979,85).

ImplementinganERPsystemisacomplicatedprocesswhichmanyfactors p o t e n t i al l y a f f e c t o n Thereh a v e b e e n r e c e n t l y m a n y r e s e a r c h p u b l i s h e d ont h e f a c t o r s contributingtoERPadoption.Authorwillmentionaboutseveralrese archesu s e d asmainreferenceofthestudy.

Formalisedprojectp lan /s ch ed u le

Theorganizationalfactorsrelatestoorganizationalstructureandculture and,b u s i n e s s process.ThetechnologicalperspectivesmentionaparticularERPproductsi n termsoftechnicalissuessuchashardwareandsoftware.

Alsothroughcitationsinthestudiesthattheyreviewed,EstevesandPastor supposedthatorganizationalaspectsaremoreimportantthantechnologicalone,andt o p m anagementseemstobethemostimportantfactor.

Somersa n d N e l s o n ( 2 0 0 1 ) p r o p o s e d t w e n t y t w o criticals u c c e s s factorsw h i ch canbeseeninTable2.3

ThesetwentytwofactorsareevaluatedacrossstagesofERPadoptionsucha si n i t i a t i o n , a d o p t i o n , a d a p t a t i o n , a c c e p t a n c e , r o u t i n i z a t i o n a n d i n f u s i o n ( i ) T o p m a n a g e m e n t s u p p o r t , ( i i ) p r o j e c t t e a m c o m p e t e n c e , ( i i i ) i n t e r d e p a r t m e n t a l t e a m competence,(iv)cleargoalsandobjectives, (v)projectmanagement,and(vi)interdepartmentalcommunicationaretopsixfactors.

Sevenb r o a d c a t e g o r i e s o f c r i t i c a l s u c c e s s f a c t o r s d e v e l o p e d byN a h a n d Delg ado (2006)whichwerederivedfromtheelevencriticalsuc cessfactorsidenti fied byNah,Lau, andKuang(2001)isanothercomprehensiveexaminationofthecriticalsuccessfactorsofER Pimplementation.

Table 2 4:sevenbroadcategories of CSFs by Nah & Delgado(2006)

Table2.5:ElevenkeyCSFsby Nah, Lau &Kuang(2003)

Accordingt o a surveyc o n d u c t e d byN a h e t a l ( 2 0 0 3 ) , C h i e f I n f o r m a t i o n officersof10 00 companiesidentify topsix factors fromelevencriticalfa ctors int a b l e 2.5tobethemostcriticalfactors.Theyare: (i)Topmanagementsupportandch amp io nshi p, (ii)Projectchampion,

(iii)Teamwork,(iv)Projectmanagement, (v)C h a n g e managementandculture,and(vi)Effectiveenterprise-wisecommunication. Thelastcomprehensivestudyreviewedinthischapterisfourcriticalsuccessf a c t o r s andonemoderatormodelproposedbyNaetal(2007).

Table 2.6:Four CSFsand 1moderator proposedby Nah etal (2007)

(topmanagementsupport,p r o j e c t managementa n d e n t e r p r i s e - w i d e c o m m u n i c a t i o n ) a r e t h e threecommonf a c t o r s betweenNahetal(2003) andSomersandNelson’s(2001)listoftopfactors.TeamworkinNahetal.

In Nahe et al.'s (2007) research, four key independent variables were identified: top management support, teamwork, enterprise-wide communication, and project management programs, which align with the factors outlined in Somers and Nelson's (2001) study on project team competence and inter-departmental cooperation These factors are also ranked among the top five in Nah and Delgado's (2006) analysis A novel aspect of Nahe et al (2007) is the introduction of organizational culture as a moderator, influencing the relationship between these independent variables and the dependent variable.

E R P impl em ent ati on success.

H4sho w the e ff ect oft he independentvariables (t op managements u p p o r t , w i d e - e n t e r p r i s e c o m m u n i c a t i o n , t e a m w o r k a n d p r o j e c t manag em ent p r o g r a m ) o n t h e d e p e n d e n t v a r i a b l e ( E R P i m p l e m e n t a t i o n s u c c e s s ) ,whereashypothesesH5-

H8showthemoderatingeffectoforganizationalcultureont h e s e relationships Figu re 2.2shows the proposedconceptual framework forthisresearch

Organizational culture Top management support H1 H5 H6 H7 H8

ERP implementation susuccess Enterprise-wide communicationH3

Independentvariables:Topmanagementsupport,teamwork,wide- enterprisecommunication,projectmanagementprogram

TopmanagementSupport:Manystudies (Nah et al (2007),Sommers andN e l s o n (2004),Akkeman&vanHelden(2002),Esteves&Pastor(2000),Nahetal(

Masharietal(2003),Umbleetal(2003),Zhangetal(2002))havestressedtheimportanceoft opmanagementsupportasa t o p crucialconditioninsuccessfulERPimplementation.Sark erandLee(2003)suggestedstrongandcommittedl e a d e r s h i p a s n e c e s s a r y i n g r e d i e n t f o r E R P i m p l e m e n t a t i o n s u c c e s s Willocksa n d Sykes( 2 0

0 0 ) sta ted th at t h e re mustb e p ub li c, e x p l i c i t , and s i n c e r e supportfortheproject

.ERPprojectneedsto bepubliclyandexplicitlyidentifiedby topmanagementa s t o p p r i o r i t y ( W e e , 2 0 0 0 ) A c c o r d i n g toH o l l a n d , L i g h t a n d G i b s o n (1999),inorderforERPsuccessfulimplementation,com mitmentofv al u a b l e resourcestotheimplementationeffortsshouldbeamust.Topmanage ments u p p o r t c a n b e c o n s i d e r e d t h e mostwidely- studiedfactorinISimplementationsuccess(Dong,2001).Topmanagementsupportiseven moreimportantforaERPp r o j e c t sinceERPisahighlyintegratedinformation systemwhichrequires cooperationoflineandstaffmembersfromallsegmentsofth ebusinessaswellasthelargescaleofresources.Forthisreason,authorhypothesizesthat:

H1:T o pm a n a g e m e n t su pp or ti nc re asest he level o f s u c c e s s o f E R P i mp lem en tatio n.

Teamwork:In ordertomaximizethe chancefor ERP successful project,theE R P teamshouldconsistofthebestpeopleintheorganization(Buckoutetal.1999

To ensure successful ERP implementation, team members must possess both business and technical knowledge, as highlighted by Bingie et al (1999) and Rosario (2000) Full-time dedication is essential for ERP team members, who may even need to relocate to collaborate effectively (Wee, 2000; Nah et al., 2007) Additionally, providing compensation and incentives is crucial for motivating project members to complete the system on time and within budget (Wee, 2000) Therefore, it is hypothesized that these factors significantly impact the success of ERP projects.

H2:T h euse ofc r os s - f u n c t i o n a l teamsthatcon sis t ofpe o p l e witht h e best b u si ne s s andtechnicalk nowledgeincreasethelevelofsuccessofERPi mp l e m en t at io n

Effective enterprise-wide communication is essential for organizations to ensure that expectations and goals are clearly conveyed among stakeholders at all levels Regular updates, such as monthly bulletins, newsletters, weekly meetings, and email communications regarding ERP implementation, are crucial for maintaining transparency Both outward communication to the entire organization and inward communication to project teams play a vital role in fostering collaboration and alignment throughout the organization.

( E s t e v e a n d P a s t o r , 2 0 0 0 ) Communicationneedstobeopenandcompletetoe nsurehonesty(Nahetal.,2007).P r o j e c t teamsarepreparedtobeabletoconvince u sersthatthenewERPsystemb ri ng snumerousbenefitswhileconvincingthemtoaba ndontheold,uncomfortablesystems.Projectteamsshouldencourageuserstosend feedback.Usersshouldbeinformedthattheirfeedbackwillbeconsideredandact edon(Rosario,2000).Itisveryimportantforstakeholderstounderstandthecapacities andlimitationsofERPsystem,hencetheworkingofERPshouldbefullyassesseda ndcommunicatedtostakeholders.

(Nelson&Somer,2001,Nahetal.,2006).Fromtheabovediscussion,a u t h o r hypothesizest hat:

Project management is crucial for the successful implementation of ERP systems, which involve complex activities across all business functions and typically require one to two years of effort (Lock, 1996) An effective project management strategy helps control the implementation process, preventing budget overruns and ensuring timely completion (Nahetal, 2003) A formal project implementation plan defines activities, commits personnel, and fosters organizational support (Bangranoff & Brewer, 2003; Rosario, 2000) Clear task assignments and a robust project control program are essential, along with well-managed ERP system customization (Rosario, 2000) Additionally, the project scope must be clearly defined and managed, while project milestones should be realistic and explicitly stated (Shanks et al., 2000).

Marsharieta l , 2 0 0 3 , Nahetal.,2007).Conductingperiodicprojectstatusmeeting sinwhicheacht e a m memberr e p o r t s p r o g r e s s , ch a l l e n g es , t r a i n i n g andeduc ationproblemsis a n invaluablemeansforevaluatingtheprogress oftheERPimplementation(Nahetal.,2 0 0 7 ) Inshort,projectmanagementprogramis veryimportanttoERPi m p l e m e n t a t i o n success.Forthisreason,authorhypothesizesthat:

OrganizationalC u l t u r e:A v i s i o n a n d M a l u r e n t ( 2 0 0 7 ) b e l i e v e d t h a t t h e cultureissues i n ano r g a n i z a t i o ns h a v ea d r a m a t i c e f f e c t o nER

Pi mp le men ta ti on success.Amaindifferencebetweenstudiesconductedindeveloped anddevelopingc ou n t r i e s isorganizationalculture,butithasbeenignoredinpre viousERPim pl em en t at i o n research(Al-

Organizational culture, as defined by Schein (1992), is a pattern of shared assumptions developed by a group to address external adaptation and internal integration, which becomes ingrained and taught to new members as the correct way to perceive, think, and feel about these issues Research by Johnson & Scholes (2005) and Sitkin (1992) indicates that a strong organizational culture can significantly influence the success or failure of IT innovations and strategies To foster this culture, organizations should provide employees with opportunities for individual development beyond formal training, such as through work assignments and job rotations.

(Nahetal.,2007).Thereisevidencetoshowthatstrongo r g a n i z a t i o n c u l t u r e w h e r e t h e r e i s w i l l i n g n e s s t o c o l l a b o r a t e a m o n g organizational canimpact thesuccessorfailureofERPimplementation(ScottandVessey,2000).Accordingt oSkokandLegge(2002),generallyERPproblemsarec a u s e d byt h e e m p l o y e e s f e e l i n g u n c o m f o r t a b l e w i t h c u l t u r a l c h a n g e s f o l l o w i n g f r o m p r o c e s s c h a n g e s i n t h e E R P i m p l e m e n t a t i o n C o n s e q u e n t l y , i f t h e r e a r e n ’ t opennessincommunicationandfacilitates learning inorganizationalcultur e,employeesmayresistnewERPsystem,whichresultsinERPfailure.Resistanceisa n a r t i f a c t o f c o r p o r a t e c u l t u r e a n d i s l a r g e l y u n c o n s c i o u s ( F o w k i , 1 9 9 1 ) A l s o a c c o r d i n g toFowki,1991,anorganizationalculturethatdoesn’tsu pportinformations h a r i n g a n d o r g a n i z a t i o n a l l e a r n i n g w i l l d i s c o u r a g e employeesf r o m d i s c u s s i n g thelikelihoodofERPsystemsimplementationfailure.E mployeesshouldbee n c o u r a g e s a n d r e w a r d e d t o e x p r e s s , e x c h a n g e i d e a s r e g a r d i n g t o w o k Furthermore,employeesshouldbeencouragedtoanalyzem istakesandlearnfromthem.

7 ; Ramayahetal.,2007;HongandKim,2002),organizationalcultureiscon sid er ed moderatort h a t m o d e r a t e s t h e e f f e c t s ofc r i t i c a l f a c t o r s o n E R P implemen tationsuccess.

Organizationalc u l t u r e i s e s s e n t i a l f o r motivatingo r g a n i z a t i o n a l l e a r n i n g , sharingi n f o r m a t i o n , a n d makingd e c i s i o n s o t h a t c u l t u r a l r e a d i n e s s ist h e p recon dition fo r p r o m o t i n g c h a n ge m a n a g e m e n t ( Mo tw ani e t a l , 2 0 0 2 ) T h e f ac t th ata managementt e a m w h o r e a d i l y acceptsn e w c o n c e p t s , n e w t o o l s i s a b l e tod r i v e theimplementationofcorporate- widesystemmoreeffectively(Dong,2001).L e a r n i n g inanorganizationmustbel edfromalllevels,speciallyfromtopmanagementa n d p r o j e c t t e a m w h o a r e c o n d u c t i v e t o c h a n g e T h e s e p e o p l e w i l l morel i k e l y t o c o n v i n c e a n d p e r s u a d e t h e r e s t o f o r g a n i z a t i o n t o a c c e p t t h e n e w systems,whichresultsinERPi mplementationsuccess.

ERPsoftwareintegratesbusinessprocessesofmanydepartments.Thep r o j e c t teamshouldbecross-functional.Umbleetal.

(2003)indicatedthattomaket h e bestofERPsystem,thecross- functionalteamshouldbenotonlyabletoworktogether,buta l s o understandandappr eciatethespecialskillsandstrengtht h a t memberscontributetotheteam.Employeeorientedcompaniesaremoreexpecte dt o facilitatecoordinationandteamworkamongcross- functionalteam membersinE R P i m p l e m e n t a t i o n p r o j e c t ( N a h e t a l , 2 0

The success of ERP implementation is positively influenced by open organizational culture, as highlighted by Nahe et al (2007) The complexity of ERP systems necessitates that all employees adapt to new tools and working methods An open culture fosters essential learning practices that contribute to successful ERP deployment According to Hofstede (2001), an open communication environment enhances the organizational learning process, further aiding ERP implementation success Additionally, a supportive culture promotes better relationships and encourages increased communication within the organization.

Team leaders face numerous challenges, including training, defining responsibilities, managing project scope, evaluating proposed changes, setting milestones, and enforcing timelines A strong learning culture is essential for successful implementation (Nahetal., 2007) Additionally, ERP systems often necessitate significant changes within the company, which can lead to confusion, resistance, and errors during implementation Consequently, many ERP projects fail to achieve their anticipated benefits (Summer, 2006) It is crucial for employees to be prepared for change and to embrace the new ERP system (Hong and Kim, 2002) According to Somers and Nelson (2004), effective change management is vital throughout all phases of the project Moreover, a results-oriented culture and an open system can enhance the execution of project management plans, supporting the learning and adaptation processes (Hofstede).

2001).Theprobabilityo f ERPimpl emen t at ion successwillraiseaccordingly(Nahetal., 2007).

SuccessinE R P i m p l e m e n t a t i o n : I n f o r m a t i o ns ys t e m ( I S ) s u c c e s s is o ne i ssu e thatismostdiscussedinongoingresearchinISfield(Delonean dMcLean, 1 9 9 2 ) ThemeasurementofISsuccessisimportantinacceptingth eeffectivenessa n d valueofISinvestmentaswellasmanagementachievement(Delon eandMcLean,2003).SinceERPsystemshavec o m p a n y - w i d e i m p a c t , academicsa n d p r a c t i t i o n e r s arestillstrugglingindetermining thebestconstructswhichcouldbestrepresentERPimplementationsuccess(WangandCh en,2006).

ERPimplementationsuccesscanbedefinedindifferentwayb a s e d ondiffere nt perspectives(MarkusandTanis,2000).Forprojectleaders,asuccessful

From a strategic perspective, success in business is defined by both business value and performance value, which includes a smooth transition to stable operations in new systems, achieving intended improvements such as inventory reductions, and enhancing decision-support capabilities (Markus and Tanis, 2000) This study will adopt the perspectives of business value and performance value, as previously utilized in studies by Langdon (2006), Mukhopadhyay et al (1995), and Tallon and Kranemer (2006) Petroni (2002) suggested a comprehensive measurement of ERP implementation success based on business and strategic perspectives, proposing a set of criteria that includes the assessment of performance and user satisfaction, as outlined in Table 2.7 This study will adapt these criteria, which align with the frameworks established by Gable, Sedera, and Chan (2003) and Nah et al.

Improvedability Abilitytomeetvolume/ productchangesCap a ci t y planning CostestimationInventory controlDeliverydatesPro ductionscheduling

Thischaptersummarizestheresultsofthepreviousstudiesconcerningc ri ti cal succes s f a c t o r s an dE R P i m p l e m e n t a t i o n su ccess T h e s t u d i e s h i g h l i g h t e d t h e g r e a t i m p o r t a n c e o f E R P i m p l e m e n t a t i o n t o w a r d s o r g a n i z a t i o n s T h e s t u d i e s s h o w e d t h a t m a n y c r i t i c a l f a c t o r s w e r e i d e n t i f i e d t o h a v e e f f e c t s o n E R P i mp l em en tat io n s u c c e s s Amongo f t h e s t u d i e s , N a h e t al.

( 2 0 0 7 ) p r o p o s e d t h e modeloffourfactorsinfluencingE R P implementatio nsuccess,Topmanagementsupport,Teamwork,Enterprise- widecommunication,Projectmanagementprogram andofonemoderator–

Thisr esea rc h c o n s u l t e d t he t h e o r e t i c a l m o d e l of E R P i m p l e m e n t a t i o n successproposedbyNahetal.

Thischapterpresentsthemethodologyusedinthisstudyincludingresearchd esi g n , q u e s t i o n n a i r e development,t r a n s l a t i o n o f t h e q u e s t i o n n a i r e , r e s e a r c h strategy,targetedpopulation,sampling,datacollectionandmethodsofdataanalysis a n d researchprocess.

Thep u r p o s e o f academicr e s e a r c h p u r p o s e c a n b e exploratory,d e s c r i p t i v e a n d explanatoryandthesearealsomostusedinresearchmethods’literature( S a u n d e r etal.2009).

An exploratorys t u d y isoftenusedtodevelopforan initialandroughu n d e r s t a n d i n g ofaproblem.Ithasanopen,flexibleandinductivea pproachtofinda l l relevantdataonetheproblem(Blanchetal.,2004).

A descriptiveisobjected “toportrayan accurateprofile ofpersons, events orsituation”(Robin,2 0 0 2 ) Itm a y eitherbeanextensionofa pieceofexploratoryr e s e a r c h orexplanatoryresearch(Saunderetal.,2009).Itoftenanswerthequestions -who,what,where,whenandhow.

Anexplanatory researchisused toe s t a b l i s h e d causal relationship b e tw e e n v a r i a b l e s (Saunderetal.,2009).Thisstudyoftenanswersthequestions– whatandw h y

Regardingt o t h i s t h e s i s , t h e r e s e a r c h p u r p o s e ism a i n l y e x p l a n a t o r y a n d p a r t l y descriptive.ItismainlyexplanatorybecauseitexplainshowtheCSFsaffectt h e successofERPimplementation.Itispartlydescriptivebecauseitaims tobringaclearpictureoftheERPsituationinVietnam.

Literature review Research Model and Hypothesis

Draft questionnaire - Pilot test (Wording (n=5) and scale’s internal consistency (n0))

Final questionnaire – Main study (field survey n 0)

Data collection, data analysis and hypothesis testing

A f t e r t h a t , a u t h o r con du cted o n l i n e survey(googledocs)o n 30p a r t i c i p a n t s i n o r d e r toexaminet h e internalconsistenceofmeasurementscales,responserate,andqualityofresponse.

Afterthepilotstudy,themainstudywasconductedusing250administeredq uestion nair e copiesdistributedto25companies.Thepurposesofthemainst udyw er e to t e s t i n g th e r e l i a b i l i t y andv a l i d i t y oft h e sc a le , t o an a l y z e multi plel i n e a r r e g r e s s i o n oftheindependentvariablesonthedependentvariableandtoana lyzethee f f e c t ofmoderatingvariableontherelationshipbetweeneach independentvariablea n d thedependentvariable.

Aquestionnaire,alsocalledmeasuringinstrumentisdefinedasaformalizeds e t ofquestionsforobtaininginformationfromrespondents(Malhotra,1996).Anyq ues ti on nair e hasthreespecificobjectives.Firstofall,itshouldtransformnecessaryi n f o r m a t i o n relatedtothestudyintoalistofquestionsthattherespondentscouldansw e r Sec on dl y, thequestionnaire sh ou ld bring ab o u t gooddynamic,t h u s e n c o u r a g e respondentstoparticipateintheinterviewsandcompletethequestionnaire. Thirdly,t h e q u e s t i o n n a i r e s h o u l d e n s u r e m i n i m u m r e s p o n s e e r r o r s ( M a l h o t r a , 1996).

6 f a c t o r s r e q u i r i n g m e a s u r e m e n t intheresearchmodel:topmanagementsupp ort,teamwork,e n t e r p r i s e - w i d e c o m m u n i c a t i o n , p r o j e c t m a n a g e m e n t p r o g r a m , o r g a n i z a t i o n a l cultureandERPimplementationsuccess.Inthispart,therespondentswereasked toi d e n t i f y theextenttowhichtheyagree/ disagreewiththestatementsrelatedtoERPsystemsusedintheirorganization Ea chitemwasmeasuredonfive-pointLikert- types c a l e s o n w h i c h 1 r e p r e s e n t s “ s t r o n g l y d i s a g r ee ” a n d 5 r e p r e s e n t s “ s t r o n g l y a g r e e ” Thesecondpartofthequestionnaireconsistedofsomedemogra phicin f o rm a t i o n o n g e n d e r , e d u c a t i o n l e v e l , w o r k i n g yearsa n d i n f o r m a t i o n o n organizationrevenueandnumberofemployees.

Topmanagementsupport wouldbeevaluatedbasedon5criteria:suffici entincentiveforERPimplementation,ERPimplementationis/ wasviewedasastrategicdecision,sufficienttopmanagementcommitmenttothisERPimplement ation,actives u p p o r t fromC E O , CIOo r COO,ande x p l i c i t identificationfromt o p man agementasa criticalpriority.

Teamworkc o n s i s t e d of5 items:p e o p l e c h o s e n f o rE R P teamshadt h e best businessandtechnicalknowledge;ERPteamsarecross- functional,ERPteamworkontheprojectfull- timeastheironlypriority,sufficientincentivesorcompensationweregiventoE R P team,and ERPprojectteamwererelocatedtogether.

Enterprise- widecommunicationwasmeasuredby5items:ERPprojectteamwerewell- preparedtocommunicateeffectivelywiththeusers,ERPprojectpeopleclearlyunderstoodt h e g oals/objectives/ purposeso f t h e i m p l e m e n t a t i o n , enoughcommunicationchannelstoinformtheusersoft h e s t a g e o f t h e E R P projectandhelpusersresolveproblems,enoughreviewswereconduct edtoensurecontinuedERPend-usersatisfaction,and enoughevaluations toassesstheworkingsofERPsystem.

Projectmanagementprogram wasevaluated by5items,milestonesweresetw i t h measureabler e s u l t s , commitmentt o promoteandmanaget h e E R P implementationproje ct,regularc o m m u n i c a t i o n f o r expectationandchallenges,education,training,ands u p p o r t wereprovidedduringtheERPimplementation,well- definetaskassignments,andwell-managedcustomizationofERPsystem.

Organizationalc u l t u r e w a s m e a s u r e d by6 i t e m s Theyare:employeesa r e s u p p o r t i v e andhelpful, adequateorganizationalresourcesareavailabletotheemployees, willingnesst o collaborateacrossorganizationalu n i t s , encouragemento r rewardfo remployees

ERPimplementationsuccesswasevaluatedby5items,includingreductio nininformalsystem, improvement incapacity planning,costestimation,inve ntory c o n t r o l , i m p r o v e m e n t i n c o o p e r a t i o n a m o n g t h e d e p a r t m e n t ino r g a n i z a t i o n , i mp ro v em en t injobsatisfaction,andreductionin“expediting”customeror ders.

Supp1 SufficientincentiveforERPimplementationwasprovidedbytop management Supp2 TheERPimplementationis/wasviewedasastrateficdecisionbytop management Supp3 Thereis/wassufficienttopmanagementcommitmenttothisERP implementation Supp4 TheCEO,CIOorCOOis/wasactivelysupportingthisERP implementation.

Team1 ThepeopleselectedforERPimplementationteamshadthebest businessandtechnicalknowledge Team2 Avarietyofcross-functionalpeoplewereselectedfortheERP implementation Team3 ThoseselectedfortheERPimplementationwereworkingonthe projectfull-timeastheironlypriority.

Comm2 PersonsinvolvedinERPprojectclearlyunderstoodthe goals/objectives/purposesoftheimplementation.

Proj3 Regularcommunicationforexpectationandchallenges,education, training,andsupportwereprovidedduringtheERPimplementation.

Cult5 Opportunitiesareprovidedforindividualdevelopment,otherthan formaltraining(e.gworkassignmentsandjobrotation) Cult6 Employeesareencouragedtoanalyzemis- takesthathavebeenmadeandlearnfromthem.

Succ1 Thereisareductionininformalsystemsforeithermaterials management,inventory,orproductioncontrol Succ2 Capacityplanning,costestimation,andinventorycontrolhas improved Succ3 Cooperationbetweenfinance,marketing,production,engineering, andsaleshaveimproved.

Succ5 Thereisareducedneedfor“expediting”businessrequirementssuchascustom erordors.

G l u s b e r g , 1 9 9 8 ) T r an sl a t i o n procedureusedthecommitteeapproach es.Committeeorparalleltranslationrequestedt h e participationofsometranslators.B asedontheoriginalq u e s t i o n n a i r e , asinstructedbyBrislin(1980)

Glusberg,1 9 9 8 ) , thetranslationsweresimultaneouslyandindependentlyimplemen ted.Aftert h a t , thetranslatorscompareddifferenttranslationversionsandchosethefi nalone.I n thisstudy,authorusedthecommitteewithtwofriendsasthetranslators.

According toHarkness &Schoua-Glusberg (1998),thetermback translationw a s t h e methodt r a n s f o r m i n g t h e t r a n s l a t e d v e r s i o n b a c k t o t h e s o u r c e l a n g u a g e Thep u r p o s e o f b a c k t r a n s l a t i o n w a s t o c o m p a r e a n d r e f e r t h e t r a n s l a t e d versionwith thesourcelanguageversion,sothatthequalityofth etranslatedversioncouldb e evaluated.

After completing the translation of the questionnaire, a pretest, referred to as an alphatest, was conducted with five participants experienced in ERP systems These participants will not be included in the main study The feedback on the translation primarily consisted of suggestions for improving word choices and phrases to enhance clarity for Vietnamese respondents For example, "cách ệt h ô n g k h ô n g c h í n h t h ứck h á c" was revised to "cách ệt h ô n g riên glẻkhác," and "Việctùybiếncủahệthống" was changed to "Sựthayđổicủahệthống." Additionally, "Trongc ông ty t ô i" was added before all six statements regarding organizational culture Following these revisions, the author finalized the draft of the questionnaire.

Inthisquantitativepilotstudy(orbetatest),theauthorusedthefinaldraf t questionnairecompletedintheabovequalitativepilotstudytocarryoutinterviewsw i t h subjectsofthestudy.Theauthordistributed37e- mailscontainingthequestionnaires to37peoplewhohadparticipatedtoimplementin gorhadbeenusingERPsystemsintheirorganization.Basedonthedatacollected,theevaluati onoftheq u e st i o n na i r e w a s p r o c e s s e d , e g d i d t h e s u b j e c t s o f t h e s t u d y u n d e r s t a n d t h e qu estio nscorrectly?

Inthisstep,theauthorreceived30answeredquestionnaires fromthe r e s p o n d e n t s T h e r e l i a b i l i t y andv a l i d i t y oft h e m e as u r e m e n t s c a l e s w a s p r e l i m i n a r i l y testedwithcollecteddatausingCronbachalphaandexploratoryfactoranalysis.Bas edonthepreliminaryresults,theauthormadenecessaryadjustments,sothatthefinal questionnairecouldbereadyforthemainstudy.

Thet a r g e t e d p o p u l a t i o n f o r t h i s s t u d y c o m p r i s e d o f e m p l o y e e s w h o p a r t i c ip a t ed inimplementingtheERPsystemsintheirenterprisesorthosew hoareu s i n g E R P systemsi n t h e i r d a i l y w o r k B a s e d o n i n f o r m a t i o n f o u n d o nwww.erpsolution.vn,http://eac.vn,thereare81companieswith“golive”ERPsystems.

Samplingtechnique:Samplingtechniqueprovidesarangeofmethodsw h i c h enableyoutoreducetheamountofdatayouneedtocollectbyconsideringonlydatafr om asub-group ratherthanallpossible casesorelements(Saunders andT h o r n h i l l , 2000).Forthepurposeofthestudyanon- probabilitysamplingdesignintheformofaconveniencewasadoptedandconsidered tobeappropriatetogatherthedata.

Samplesize:Samplesizedependsonanalyticalmethods,thisstudyhasusedE x p l o r a t o r y F a c t o r A n a l y s i s ( E F A ) w h i c h , a c c o r d i n g toH o a n g and Chu(2005)suggestedthatt h e n u m b e r ofsamplest o b e 5 t i m e s t h e numberc h a n g e s o bserved; Thestudywasconductedwith31observed v a r i a b l e s (31 variablesx 5= 1 5 5 o b s e r v a t i o n s a m p l e s ) , t h e samples i z e mustbea t l e a s t 155.Similarly,accordingtoHairetal.

(1998)citedinNguyen(2011),referstoo b s e r v a t i o n s / i t e m s rateis5:1,thatmeansameasuredvariableat leastfive observedv a r i a b l e s Moreover,Tabachnick&Fidell(1991)citedinNguyen(2011),sugge stedthatregressionanalysistoachievebestresults,thesamplesizetosatisfytheformula: n≥8k+50 (3.1)

Thestudywasconductedwith4independentvariables.Sothesamplesizemustbea t lea st82.Thisresearchconductedwithsamplesizesofabout200isconsideredapp ropriate.

Datacollectionprocess:Samplingmethodofthisstudywasaconveniencesa mpling,t h e o b j e c t issurveyingemployeesatcompaniesu s i n g E R P s y s t e m s Employ eescanbenon-managerialormanagerialwhoimplementand/ orusingERPsoft war e intheirdailywork.

Atthetimethestudywasundertaken,thereweremorethan80companiesinVietna mwhohaveimplementedERP,25ofwhichareinHoChiMinhCity,DongNaiandBinh Duongprovince(Appendix1).

Themainstudyw a s f i r s t l y su pp ose d t o b e c o n d u c t e d u s i n g o n l i n e s u r v e y method.Forthefirst one week, therewere onlyanother6correspondentso nline.T hea u t h o r t h e n d e c i d e d t o se n d t w o h u n d r e d self- administeredq u e s t i o n n a i r e s t o t w e n t y contactpoints(friendsorbusinesspartners)a ttwentycompaniestoaskthemt o h e l p s u r v e y A u t h o r a l s o c a m e t o t h e 5 compa niesf i e l d s ( w i t h w h o m a u t h o r d i d n ’ t haveconnection)toconductthesurv eyafterpre-contactingviaphonewiththeIT-managers/ERPprojectmanagers.

After3weeks,therewere207outof250hardcopyquestionnairecollecte d(responserateis83%).Afterfiltering,sevenquestionnaireswereeliminatedduetomany missingvalues.Thedatawerefinallybasedon200questionnaires.

TheStatisticalPackage fortheSocialSciences(SPSS)version20.0wasusedfo rallstatistical calc ul at io ns D escriptiveandinferentialstatisticsincludes:Cronbachalpha,Exploratory factoranal ysis,correlation,multipler e g r e ss i o n andh i e r a r c h i c a l regressionanalysis.The analysis processwasimplementedasfollow:

 Step 1 : Testingthereliabilityofthescale.C r o n b a c halphaanalysiswereu sedforthispurpose.Cronbachalphaanalysiswasappliedtoeachsetofitemstoassessandre finethemeasurementitem.ItemshavinglowCronbachalpha0.3,Cronbachalpha>0.60,%ofvariance(Hairetal.,1998).

Cronbach'salphacoefficientofeachconstructisatleast0.6andtotalcorrelati on(CorrectedItem-TotalCorrelation)>0.3(Hairetal.,1998).

TheC r o n b a c h a l p h a c o e f f i c i e n t s i n T a b l e 4 2 s h o w s t h a t a l l m e a s u r e m e n t scalesarereliable.Thecorrecteditem- totalcorrelationvaluesarehigh(thesmallestvaluef a l l s o n t h e C u l t 1 v a r i a b l e :

5 1 4 ≥ 3 0 ) I n a d d i t i o n , t h e C r o n b a c h a l p h a coefficientvaluesofmea surementscalesaresatisfactory( t h e smallestisTopm a n a g e m e n t support(Supp): 7

Cronbach'sA lphaifItemD eleted Topmanagementsupport(Supp)-Cronbachalpha:0.797

Supp4-activesupport from CEO,CIO,COO 582 757

Team3-full time workingforprojectTeam4- sufficientincentives/compensationTeam5- relocatedtogether

Proj2-commitmentto promote&manage project 700 785

Priortotheextractionofthefactors,severaltestsshouldbeusedtoassessthesuitabilityo ftherespondentdataf o r factoranalysis.Thesetestsi n c l u d e K a i s e r - M e y e r -

O l k i n (KMO),MeasureofSamplingAdequacy,andBartlett'sTestofSphericit y.TheKMOindexrangesfrom0to1,with0.50consideredsuitableforf a c t o r an alysis(Trong&Ngoc,2005).TheBartlett'sTestofSphericityshouldbes i g n i f i c a n t (p0.60,%ofvariance(Hairetal.,1998).