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

 

A while back, I was reviewing academic material on ERP/SAP Project success factors. One particular study stood out because it laid out 22 specific success factors by project stage [FN1]. Even though this study dates from 2001, the Critical Success Factors (or CSFs) still ring true today, and the conclusions are consistent with what I have seen on SAP projects since I started in 1994.

While the sample size was somewhat limited (86 completed questionnaires), the data and information provided insights on some of the key or critical success factors.

The stages reviewed were the following:

• Initiation – business need, software selection, vendor selection
• Adoption – beginning of the implementation process and system design
• Adaptation – implementation, adjustment, and business fit stage
• Acceptance – go-live and productive business use of the system
• Routinization – overall acceptance and sustained productive use of the system
• Infusion – long-term acceptance and use of the system as well as additional functionality additions

Based on the academic literature when the study was done, 22 key ERP Project Success factors were defined (in order of the study’s response importance):

This study went on to break out the top five reasons, by project stage, for project success.

I have added an additional dimension. I assumed significant results to be at least three percent above the median result. This showed that each of the project stages has areas that are statistically significant, and areas that are more likely dependent on each individual project. One important item to note is that while any particular project may have a completely different makeup, equating to entirely different factors of importance, these initial assumptions provide a great place to start an analysis.

Top 5 Success Factors by ERP Project Stage:

To make as much sense of the data as possible, I assumed the lowest value of the top five was my baseline value, and anything within three percent of that value was a margin of error (the sample size may actually make the margin of error closer to five percent). I considered anything within that margin of error a “toss-up” for any particular project. However, anything outside of that three percent range I consider statistically significant and having much wider and more general application to most projects.

However, no item in the top five list by each stage of the project can be underestimated or overlooked. After all, these are the distilled critical factors for project success by project stage.

One thing that stands out in this analysis is that through much of the project stage, and then after the system is productive and live, interdepartmental communication and cooperation rank consistently at the top. Right behind them, top management is a consistent theme, and then vendor-related prospects round out the top (vendor support, partnership with vendor, vendor’s tools, and project team competence).

Conclusion on ERP Project Success Criteria – The Top 3 Recurring Success Themes Across All Dimensions of an ERP Project

In broader or more general terms, the academic literature bears out my personal experience. Across the entire project and application dimension, the key success factors for ERP projects like SAP are (in order of importance):

1. Interdepartmental communication and cooperation
2. Top management involvement (presumably this would encourage the first item as well; see the post entitled “The Real Reason Executive Participation Creates IT Project Success”)
3. The quality of the implementation vendor (consultants, tools, etc.). For more information on selecting a quality vendor, see this four-part series:

Achieve Breakthrough ERP, SAP, or IT Project Success: 1 of 4
Breakthrough Project Success: 2 of 4, IT Vendor Proposal RFP
Breakthrough Project Success: 3 of 4, Vendor Selection and Contracts
Breakthrough Project Success: Part 4 of 4, Last Low Risk Chance for Results

So Why Do SAP or Other ERP Projects Fail?

Projects can fail for any number of reasons. Even the 22 success criteria for ERP or SAP projects listed in this post are not comprehensive. However if you notice any consistent themes across nearly all dimensions of a project, any of them that are lacking create significant risk for failure. At a future date, I will be publishing a proprietary and unique evaluation model, which will clearly identify the key project risk areas specific to your company and your implementation.

Let’s review a quick summary of the three key areas and one of the high-risk areas that you have the least amount of control over. After having selected the application system and the technical infrastructure to support it, these three items are critical ingredients for your ERP project success. Top Management involvement and interdepartmental cooperation are directly and completely within a company’s control; however, the ability to influence the type of vendor is only indirectly controllable through the selection process. If the vendor selection process leads to the selection of a less than optimal vendor, you may not realize your desired business benefits even if you get everything else right.

What this study points out even more clearly is why you need consultants with verifiable experience (Screening Methods to Find the Right SAP Consultant), who can bridge the technology to business gap with strong communication skills (Screening Methods to Find the Right Consultant – Part 2). To ensure you select the right consultant, see the following article: Protecting Yourself from SAP Consulting Fraud.

The second item related to top management involvement may have reasons not considered here or in other resources, such as the ability to imprint future strategy and business direction on the technology implementation. The post already noted (The Real Reason Executive Participation Creates IT Project Success) points this out and demonstrates the importance of senior level management involvement in a project.

Without those quality resources provided by your consulting or resource vendor, your chances for project success diminish significantly.

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[FN1] Somers, T., and Nelson, K., (2001) The Impact of Critical Success Factors (CSF) across the Stages of Enterprise Resource Planning Implementations. Proceedings of the 34th Hawaii International Conference on System Sciences.