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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 23

A McKinsey 7S Model-Based Framework for ERP Readiness Assessment Payam Hanafizadeh, Allemeh Tabataba’i University of Tehran, Iran Ahad Zare Ravasan, Allemeh Tabataba’i University of Tehran, Iran

ABSTRACT Implementing Enterprise Resource Planning (ERP) systems is a complex, lengthy and expensive process which usually faces serious challenges and failures. Thus, it is necessary to perform a readiness assessment at the initial stage of an ERP implementation project to identify weakness areas which may encounter the project with failure. This paper proposes a new framework for assessing readiness of an organization to implement the ERP project on the basis of McKinsey 7S model using confirmatory factor analysis. Through this method, the construct of ERP readiness is proposed based on 7 dimensions namely “structure”, “strategy”, “systems”, “skills”, “style/culture”, “staff”, and “shared values/ superordinate goals”. Using the framework, the current situation of the organization can be determined and necessary changes can be made prior to system implementation. The proposed framework is then applied to 2 real Iranian banking cases and the advantages of the framework over available frameworks are illustrated. Keywords:

Confirmatory Factor Analysis (CFA), Critical Success Factors (CSFS), Enterprise Resource Planning (ERP), ERP Readiness Assessment (ERA), McKinsey 7S Model, Multidimensional Constructs

INTRODUCTION ERP systems are described as “computer-based systems designed to process the transactions of an organization and facilitate integrated and real-time planning, production, and customer response” (O’Leary, 2000). These systems are designed to address the problem of fragmentation as they integrate and streamline internal processes by providing a suite of software modules that cover all functional areas of a DOI: 10.4018/jeis.2011100103

business (Koch, Slater, & Baatz, 2001). Although, ERP systems can bring many benefits to organizations, the high failure rate is a major concern (Davenport, 1998). It is said that, about 70 percent of ERP implementations fail to deliver anticipated benefits (Al-Mashari, 2000) and three quarters of these projects are unsuccessful (Griffith, Zammuto, & AimanSmith, 1999; Hong & Kim, 2002; Kumar, Maheshwari, & Kumar, 2003). These projects are on the average 178% over budget, took 2.5 times longer than intended and deliver only 30% of the promised benefit (Zhang, Lee, Huang,

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24 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

Zhang, & Huang, 2005). These statistics imply that ERP projects are one of the most difficult system development projects. To avoid such costly failures, much effort has been done by researchers. Some researchers have provided valuable insights into the process of ERP implementation (Holland & Light, 1999; Mandal & Gunasekaran, 2002; Motwani, Mirchandani, Madan, & Gunasekaran, 2002; Soja, 2008; Subramanianh & Hoffers, 2005; Wang, Shih, Jiang, & Klein, 2008; Yusuf, Gunasekaran, & Abthorpe, 2004) and others have identified a variety of critical factors affecting either on success (Al-Mashari, 2003; Hanafizadeh, Gholami, Dadbin, & Standage, 2010; Nah & Delgado, 2006; Nah, Zuckweiler, & Lau, 2003; Zarei & Naeli, 2010; Zhang et al., 2005) or failure (Aladwani, 2001; Amoako-Gyampah & Salam, 2004; Bradford & Florin, 2003; Hong & Kim, 2002; Somers & Nelson, 2004; Umble & Umble, 2002) of ERP projects. Considering the importance of ERP, some works conducted in this area are reviewed here. Esteves and Pastor (2001) in their work summarized and grouped ERP literature until 2000 according to what they term as “the ERP lifecycle framework”. The lifecycle consisted of adaption, acquisition, implementation, usage & maintenance, evolution, and retirement (Esteves & Pastor, 2001). They showed that most of the literature published prior to 2000 focused on implementation approaches. Other studies conducted considering categories proposed by Esteves and Pastor (2001) approved these results and suggested that literature on implementation dominates others, i.e., 38% of total papers published between 2000- 2005. According to the results, just 2% of all papers devoted to studies on adaption phase (Dery, Grant, Harley, & Wright, 2006). So, it is clear that there is a dearth of studies in the pre-implementation phases such as ERP selection, readiness assessments, ERP acquisition planning, etc. This paper, as a potential contribution to knowledge, is intended to consider the subject of ERP Readiness Assessment (ERA). Such an assessment determines the current state of organization’s readiness to implement an ERP

system besides identifying the weakness areas which must be improved prior to later stages. Thus, the aim of this paper is introducing the concept of ERA and developing and validating a practical framework for such an assessment. In practice, the results of the paper would enable managers to achieve a comprehensive understanding of ERP project and help them to make a proper decision on initiating the ERP project. In addition, they would be aware of their weakness areas prior to project implementation. Therefore, they can effectively manage the potential risks and costs associated with the project and avoid most of the challenges in later stages of the implementation.

LITERATURE REVIEW Two basic elements of the present research are the ERA and the McKinsey 7S model which are well described. Also, a brief review on available renowned models in the field is presented. Finally the most important factors in ERA are extracted from the most relevant literature and the conceptual framework is developed based on these factors.

ERP Readiness Assessment Failures of ERP implementation can be caused by multiple factors. But, studies suggest that failure is largely due to organizational and social, rather than technical factors (Fitzgerald & Russo, 2005). However, there are extensive challenges in the implementation of ERP systems which sometimes turn the project into a complete failure. These challenges affect the success of ERP project in the implementation stage and must be identified at the beginning of the project to avoid potential risks in latter stages. Thus, it would be necessary to assess and analyze the preparedness of an organization before initiating the project. Without proper readiness, the project probably fails or faces intensive challenges. That’s why ERA is usually introduced as a separate stage for ERP projects which must necessarily be conducted prior to project kick-off (Leon, 2007). The success of

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 25

Table 1. Definition of the elements of McKinsey 7S model (Peters & Waterman, 1982) Dimension

Definition

Strategy

Actions a company plans in response to changes in its external environment

Structure

Basis of specialization and co-ordination influenced primarily by strategy, size, and diversity of organization

Systems

Formal and informal procedures that support the strategy and structure

Style / Culture

Consisting of two components as below:   • Organizational culture: the dominant values, beliefs, and norms which develop over time and become relatively enduring features of organizational life.   • Management style: more a matter of what managers do than what they say; how do company managers spend their time; what are they focusing on

Staff

The people/human resource management- processes used to develop managers, socialization processes, and ways of introducing young recruits to the company

Skills

The distinctive competences- what the company does best

Shared Values

Guiding concepts, fundamental ideas around which a business is built- must be simple, usually stated at abstract level, have great meaning inside the organization even though outsiders may not see or understand them.

an ERP implementation greatly depends on the state of readiness of the company. Higher assessment scores indicate higher level of readiness that enhances the likelihood of achieving success in the project (Razmi, Sangari, & Ghodsi, 2009). Such an assessment not only identifies an organization’s current capability to implement an ERP project, but also identifies weakness areas that must be improved to achieve a better state of readiness for ERP implementation.

McKinsey 7S Model The McKinsey 7S Model was developed in the early 1980s by Tom Peters and Robert Waterman, two consultants working at the McKinsey& Company consulting firm and has been used to analyze over 70 large organizations, since then. The model was created as a recognizable and easily remembered model in business. The seven variables, which the authors termed “levers” all beginning with the letter “S” include “structure”, “strategy”, “systems”, “skills”, “style”, “staff”, and “shared values/ superordinate goals” (Peters & Waterman, 1982). Table 1, summarizes the definition of the model elements.

It is believed that for long-term benefit, these variables should be changed to become more congruent as a system. Effective organizations achieve a fit between these seven elements. These elements are categorized in socalled hard S’s and soft S’s. The hard elements (strategy, structure, and systems) are feasible and easy to identify. The four soft S’s (shared values, skills, staff, and style) however, are hardly feasible. The external environment is not mentioned in the McKinsey 7S model, although the authors do acknowledge that other variables exist and that they depict only the most crucial variables in the model (Peters & Waterman, 1982). The main sources of academic work on the 7S model (Pascale & Athos, 1981; Peters & Waterman, 1982; Waterman, Peters, & Phillips, 1980) can be used for more studies about the model. Regarding the high capability of the 7S model to give a comprehensive view of every organization, authors have exploited the model in developing their conceptual framework. This would help them have a proper and comprehensive look on organizational diverse dimensions and their associated factors.

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26 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

Table 2. Categories and factors of Razmi’s framework (Razmi et al., 2009) Categories Project

Vision and Goals

Factor • Project championship • Resource allocation • Assign responsibilities • Project team • Project scope • ERP implementation vision • ERP mission and goals

Systems and Processes

• Existing systems • Existing processes

Culture and Structures

• Culture • Decision mechanism • Organizational structure • Communication

Human Resources

Related Works There are some ERP or enterprise system (ES) readiness assessment frameworks proposed either by practitioners or scholars, but the scope of this part is limited to only those frameworks that were peer-reviewed or scholarly and published widely in the literature. Hence, through an exhaustive literature review, the most related frameworks are identified as below:

BEST Framework The BEST (Better Enterprise SysTem implementation) framework, used for analyzing CEAO (cause–event–action–outcome) chain, is based on a process-based model of organizations (Wognum, Krabbendam, Buhl, Ma, & Kenett, 2004). The BEST assessment tool is aimed at analyzing the preparedness of an organization at the start of an enterprise system implementation project. This framework has 3 dimensions of permanent business process, design and tuning of the new enterprise system, and project management. Furthermore, there are 6 aspects in the framework, namely strategy and goals, management, structure, process, knowledge and skills, and social dynamics. A total of 264 CEAO

• Top management • Personnel

chains have been gathered through 24 case studies and have been analyzed and classified into the reference framework cells (Wognum et al., 2004). The framework is developed for use in all kinds of ESs rather than specific ERPs.

Razmi’s Framework This framework has 3 aspects as the main areas of ERP readiness. That is, organizational readiness, project management readiness, and change management readiness. Also, 15 factors are identified as the assessment factors and are classified into five categories as “project”, “vision and goals”, “systems and processes”, “culture and structures”, and “human resources” illustrated in Table 2. The global weights of the categories and factors are calculated using fuzzy ANP algorithm. Finally, the proposed model has been applied in financial affairs department of an Iranian power holding company (Razmi et al., 2009).

Raymond’s Framework The framework is proposed for evaluating the level of readiness for ERP adoption in manufacturing SMEs. It has 4 dimensions including

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 27

Table 3. Dimensions and factors of Raymond’s framework (Raymond et al., 2006) Dimensions Organizational Context

Factors • Availability of resources • Operational methods • Competitive strategy • Sophistication of existing IT use • Procurement methods

Business Processes

• Operational • Managerial • Integration

Perception of ERP

• Complexity/cost • Benefits/strategic advantage • Desire to implement

External Forces

• Business environment • Power of customers

organizational context, external forces, perception of ERP, and business processes with 13 associated factors. Through a field study of 11 manufacturing SMEs, the framework classified these firms in three clusters of “committed adopters”, “uncommitted adopters”, and “late adopters” (Raymond, Rivard, & Jutras, 2006). Each dimension and their related factors are listed in Table 3. By reviewing the presented frameworks, one can infer that they concentrate on some important factors, while overlooking some others. For example, BEST framework does not consider technological issues in ES implementations, besides it is not customized for ERPs. Razmi’s framework does not have any factor for assessing the current users and managerial skills required to implement the system. And finally, Raymond’s framework does not take into account factors associated with strategy, skills and human resources. Hence, it is observable that these models have focused on some aspects of organizations using their own viewpoint, while a holistic and comprehensive approach is absent there. Considering lack of a holistic assessment framework in the literature, authors intend to present a new framework encompassing a comprehensive set of dimensions and associated factors using the McKinsey 7S model in this paper.

ERP Readiness Factors In this study, a comprehensive review of the relevant literature was conducted in 2009 and 2010. Articles from journals, conference proceedings, doctoral dissertations, and textbooks were identified, analyzed, and classified. Since there are numerous factors affecting ERP projects implementation, it was necessary to search through a wide range of studies from different sources. So, the scope of the search was not limited to specific journals, conference proceedings, doctoral dissertations, and textbooks. Management, IT, and IS are some common academic disciplines in ERP research. Consequently, the following online journals, conference databases, dissertation databases, and textbooks were searched to provide a comprehensive bibliography of the target literature: ABI/INFORM database, ACM Digital Library, Emerald Fulltext, J Stor, IEEE Xplore, ProQuest Digital Dissertations, Sage, Science Direct, and Web of Science. The literature search was based on the descriptors, ‘ERP critical success factors’, ‘ERP implementation success’, ‘ERP success factors’, ‘ERP readiness assessment’, ‘ERP readiness assessment factors’, ‘ERP requirements’, and ‘ERP prerequisites’. While the 7S model has been used as the basis of the proposed framework, McKinsey 7S question-

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28 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

naires have been used for discovering other associated factors in each dimension. The time frame was based on the availability of the resources in these online databases. An initial search through the literature yielded 353 articles. The actual selection of the article for inclusion in the compilation was dependent upon the researcher’s decision after reading the article abstract and title. As mentioned earlier, readiness assessment had to be conducted at the pre-implementation phase of an ERP project. Therefore, those articles including factors attended especially in the preimplementation phase of an ERP project would be identified for further investigations. Based on preliminary investigations, 113 articles were selected for further studies. Table 4 shows the distribution of the articles under the categories of journals, conference proceedings, textbooks, and dissertations. Through this method, 23 factors were identified in 7 main dimensions. Each main dimension and associated factors are explained below.

Strategy A risk repeatedly identified in the literature is lack of alignment between the organization strategy and the chosen ERP software (Davenport, 1998, 2000). Organizations must be aware of why an ERP system should be implemented and what critical business goals it will address (Umble & Umble, 2002). Hence, identifying business goals, determining the strategic business issues and strategic requirement identification are essential elements of an ERP project prior to initiating the project. This study focuses on vision and mission, goals/objectives of the project, and strategic IT plans. Vision and mission. It is essential to have a clear vision and mission for the ERP system (Esteves & Pastor, 2000; Law & Ngai, 2007; Nah & Delgado, 2006; Nah, Lau, & Kuang, 2001). The vision and mission are needed to guide the ERP implementation (Buckhout, Frey, & Nemec, 1999; Holland

& Light, 2001) and should be related to business needs including a justification for the investment (Ngai, Law, & Wat, 2008). They must be well understood across the organization (Shanks et al., 2000; Somers & Nelson, 2001) and should be clearly stated in the business plan (Holland & Light, 1999; Nah et al., 2003; Zhang, Lee, Zhang, & Banerjee, 2003). Goals / objectives. Goal is a general aim in line with the company’s mission (Johnson & Scholes, 1999). The initial phase of any project should begin with a conceptualization of the goals and possible ways to fulfill them (Somers & Nelson, 2001). Davenport (2000) attributed the high failure rates of ERP projects to poorly defined goals. The goal statement should include critical business needs the system is supposed to address and the business values it is intended to deliver (Razmi et al., 2009; Soja, 2008). Goals should also be measurable (Al-Mashari, Al-Mudimigh, & Zairi, 2003) and well-understood across the organization (Shanks et al., 2000; Somers & Nelson, 2001). In addition to project goals, the scope of the ERP project must also be clearly defined (Bajwa, Garcia, & Mooney, 2004; Rosario, 2000; Shanks et al., 2000; Somers & Nelson, 2001). Strategic IT plans. The alignment of IS planning and business planning is one of the top problems reported by executives and IS managers (Ho & Lin, 2004; Somers & Nelson, 2003). It is believed that the alignment of IT with business plans supports organizations to use IT as a competitive weapon (Kearns & Lederer, 2001) and boosts organizational performance (Oh & Pinsonneault, 2007). Today, businesses need strategic planners to continually evaluate business goals and define the information systems capabilities required to support these goals (Stratman & Roth, 2002). Strategic IT planning addressing this issue, characterizes an organization’s competence in matching IT capabilities with the changing business requirements

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 29

Table 4. Distribution of articles by journals, conference proceedings, textbooks, and dissertations No. of Articles

Publication Type/ Title Conference

14

  Americas Conference on Information Systems (AMCIS)

4

  European conference on information systems

1

  Annual BIT conference

1

  International Conference on Information Systems

2

  Hawaii international conference on system sciences

4

  IEEE International Conference on Management of Innovation and Technology

2

Journal

92

  Academy of Management Review

1

  ACM SIGMIS Database

1

  Advanced engineering informatics

1

  Advances in Engineering Software

1

  Automation in construction

1

  Business Process Management Journal

11

  Business World

1

  Communications of the ACM

3

  Communications of the AIS

1

  Computers in Industry

2

  Construction Management and Economics

1

  Datamation

1

  Decision Sciences

1

  Decision Support Systems

2

  European Journal of Information Systems

1

  European Journal of Operational Research

4

  Harvard business review

1

  IEEE Engineering Management Review

1

  IEEE software

1

  Industrial Management

1

  Industrial Management & Data Systems

4

  Information & Management

9

  Information Management & Computer Security

1

  Information Systems

1

  Information Systems Frontiers

1

  Information systems management

4

  International Journal of Accounting Information Systems

1

  International Journal of Enterprise Information Systems

3 continued on following page

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30 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

Table 4. continued   International Journal of Human-Computer Interaction

1

  International Journal of Information Management

2

  International Journal of Operations & Production Management

2

  International Journal of Production Economics

3

  International Journal of Production Research

1

  International Journal of Project Management

1

  Journal of Computer Information Systems

2

  Journal of Engineering and Technology Management

1

  Journal of Enterprise Information Management

4

  Journal of Global Information Technology Management

1

  Journal of Management Information Systems

2

  Journal of Manufacturing Technology Management

1

  Journal of Strategic Information Systems

1

  Knowledge and Process Management

1

  Management science

2

  MIS Quarterly Executive

4

  Omega

1

  Technovation

1

Textbook

6

Dissertation

1

Total

of the enterprise. It helps ensure that IT development goals in general and ERP goals in particular are aligned with the needs of the organization.

Structure The structure of an organization is considered very important for firms adopting ERP (Davenport, 1998, 2000; Hong & Kim, 2002). According to Daft (1998, p. 15), “Structural dimensions provide labels for describing the internal characteristics of an organization. One can mention commonly cited structural dimensions as centralization, specialization, standardization, formalization, hierarchical levels, and span of control”. Different researchers used specific dimensions based on their research purposes; for example, centralization

113

and formalization have been used in assessing technology-structure relationships (Morton & Hu, 2004). In this study, authors focused on the centralization, specialization, and formalization aspects, which are believed to be adequate for assessing technology- structure relationships (Donaldson, 2001). In addition, organization size and CIO position in organization have been studied here. Centralization. When decisions are kept at the top, an organization is centralized, whereas in decentralized organizations, decisions are delegated to lower organizational levels among its members (Daft, 1998; Mintzberg, 1980). In the case of ERP projects, centralization refers to the extent to which project decisions are controlled by the top management or project manage-

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 31

ments. Tight control over project decisions can ensure that system implementation is consistent with the organization’s goals and conflicts can be efficiently resolved. On the other hand, centralization restrains the innovativeness of the project team members and may restrain their participation in the project (Chien, Hu, Reimers, & Lin, 2007). However, it seems that organizations with high levels of centralization may favor ERP, in contrast to decentralized ones (Morton & Hu, 2004; Strong, Volkoff, & Elmes, 2001). Specialization. Specialization is the extent to which tasks are subdivided into separate jobs in an organization. If specialization is extensive, it is likely for each worker to perform a narrow range of works. ERP systems might be more suitable for firms having distinct and specialized functions or tasks (Strong et al., 2001). It’s believed that ERP systems may be more useful in organizations where operations and tasks are explicitly defined. The reason is that ERP enforces a disciplined behavior for adopting organizations in such a way to make procedures clear (Morton & Hu, 2004; Strong et al., 2001). Therefore, organizations with high level of specialization may favor ERP, in contrast to less specialized ones. Formalization. Formalization is defined as the standardization of work processes and documentation (Donaldson, 2001). In other words, formalization is the degree to which rules and procedures are clearly documented and are made known to all employees. Just like specialization, it is believed that where organizational operations and tasks are explicitly formalized, ERP systems may be more useful (Morton & Hu, 2004; Strong et al., 2001). Size. Evidence suggests that the success of IT projects in general and ERP projects in particular may be impacted by organization size (Bernroider & Koch, 2001; Buonanno et al., 2005; Laukkanen, Sarpola, & Hallikainen, 2005; Lee & Xia, 2006).

It seems that, larger firms have bigger pools of sophisticated professionals and are able to house larger IT departments than do smaller firms (Hunton, Lippincott, & Reck, 2003; Laukkanen et al., 2005). Furthermore, other researchers imply that success of IT projects increases in larger organizations because of more availability of resources (Ein-Dor & Segev, 1978; Hunton et al., 2003). Organization size has been described differently in the literature. However, it seems that the concept can be assessed using employee workforce, and/ or annual turnover/sales (Buonanno et al., 2005; Laukkanen et al., 2005). Here, authors chose to use both annual revenues and number of employees for assessing the organization size. CIO position. The role of the chief information officer (CIO) has grown in importance just as the role of IT within organizations in recent years (Enns, Huff, & Golden, 2003; Preston, Leidner, & Chen, 2008). Today, CIOs are executive-level leaders that generally report directly to the CEO (Chun & Mooney, 2009). Today, the role of CIO has evolved into the one responsible for providing IT infrastructure and capabilities to ensure effective business operations (DellaVechia, Scantlebury, & Stevenson, 2007; Leidner & Mackay, 2007). They help planning and implementing IT strategies in organizations. In successful ERP projects, the CIO must be able to build strong relationships with her/his business executive peers, must behave as a strategic partner with the business, and be able to align IT investments with strategic business priorities (Willcocks & Sykes, 2000).

Systems Systems refer to formal and informal procedures and systems that support the strategy and structure (Peters & Waterman, 1982). For assessing this dimension, authors used three following factors:

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32 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

IT Infrastructure. Adequate IT infrastructure, hardware and networking are crucial for the success of an ERP project (Al-Mashari, 2003; Al-Mashari et al., 2003; Chuang & Shaw, 2008; Finney & Corbett, 2007; Jarrar, Al-Mudimigh, & Zairi, 2000; Ngai et al., 2008; Peslak, 2006; Soja, 2006; Umble, Haft, & Umble, 2003; Verville, Bernadas, & Halingten, 2005). Before ERP implementation, current IT situation have to be carefully evaluated to determine the problems that an organization may encounter during implementation (Holland & Light, 1999). The more the complexity of organizational legacy systems (e.g., multiple platforms in enterprise applications), the higher the amount of technical and organizational efforts required in ERP implementation, and vice versa. So, it’s crucial for organizations to overcome the problems arising from IT legacy systems. Moreover, completeness, compatibility, usability and integrality of the current systems should be achieved (Yang, Wu, & Tsai, 2007) and current infrastructure might be upgraded (Kumar et al., 2003; Palaniswamy & Frank, 2002). Business processes. Business processes is considered as one of the important factors in ERP literature (Al-Mashari et al., 2003; Bajwa et al., 2004; Kræmmergaard & Rose, 2002; Palaniswamy & Frank, 2002; Somers & Nelson, 2004; Umble et al., 2003; Yusuf et al., 2004). Since, modifications of the ERP software should be avoided to reduce errors and to take advantage of newer versions and releases of the system, aligning the business process to the software implementation is a must (Holland & Light, 1999; Sumner, 1999). It is inevitable that business processes are identified, documented, improved and molded to fit the new system (Bingi, Sharma, & Godla, 1999; Yang et al., 2007). Usually, extensive reengineering efforts is necessary before choosing a system (Kremers & Van Dissel, 2000; Somers & Nelson, 2003). Hence, the processes needing improvement should be identified and necessary

adjustments should be made prior to ERP implementation (Yang et al., 2007). Also, a clear understanding of business process should be achieved in ERP projects (Ho & Lin, 2004; Motwani, Subramanian, & Gopalakrishna, 2005; Murray & Coffin, 2001; Ward, Hemingway, & Daniel, 2005). Data. One of the important requirements of the success of an ERP system is the availability and timeliness of accurate data. Since ERP system modules are intricately integrated, improper data input into one module will adversely affect the functioning of other modules. Thus, data quality and accuracy is a major determinant of ERP success (Bajwa et al., 2004; Somers & Nelson, 2001, 2004; Umble et al., 2003; Xu, Nord, Brown, & Nord, 2002; Yusuf et al., 2004; Zhang et al., 2005). One of the main data-related problems in organizations is that data are not kept in a single database; rather, they spread across dozens of separate databases, which hinders the project success (Davenport, 1998). Data-related challenges include finding the proper data to load into the system and converting disparate data structures into a single, consistent format before system use (Somers & Nelson, 2004). Some authors also pointed to data quality controls in the project (Xu et al., 2002). Also, educating users on the importance of data accuracy and correct data entry procedures should be a top priority in an ERP project (Umble et al., 2003).

Style / Culture Style mainly refers to organizational culture and management style (Peters & Waterman, 1982). Three factors are extracted here as below: Organizational culture. Cultural attributes are cited among important factors affecting ERP projects and many researchers have suggested that the corporate culture can cause mismatch problems during the ERP implementation process (Al-Mudimigh,

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 33

2007; Bozarth, 2006; Häkkinen & Hilmola, 2008; Ke & Wei, 2008; Krumbholz & Maiden, 2001; Peslak, 2006; Soh, Kien, & Tay-Yap, 2000; Soja, 2006). Some researchers suggested that successful technological innovations require that both the technology be aligned with the organization culture and the culture be reshaped to fit the demands of the new technology (Cabrera, Cabrera, & Barajas, 2001; Yusuf et al., 2004). Dimensions of organizational culture can be characterized as learning and development, participative decision making, power sharing, support and collaboration, and tolerance of conflicts and risk (Ke & Wei, 2008). Top management support. Top management support is the most frequently cited CSF for ERP implementation (Al-Mashari et al., 2003; Chuang & Shaw, 2008; El Sawah, Tharwat, & Rasmy, 2008; Finney & Corbett, 2007; Häkkinen & Hilmola, 2008; Hanafizadeh et al., 2010; Law & Ngai, 2007; Remus, 2007; Snider, Da Silveira, & Balakrishnan, 2009; Soja, 2006; Umble et al., 2003; Yusuf et al., 2004; Zhang et al., 2005). The ERP project must receive approval and support from top management particularly early in project life (AlMashari et al., 2003; Bingi et al., 1999; Sarker & Lee, 2003; Shanks et al., 2000; Somers & Nelson, 2001). She/he must be willing to become involved and to allocate required resources to the project (Holland & Light, 1999; Nah et al., 2003). Since ERP projects affect many stakeholders in an organization, top management needs to mediate between various interest groups to resolve conflicts when necessary (Davenport, 1998). Management must also be involved in every step of the ERP project, monitor the progress of the project and lead the project teams (Bancroft, 1996; Nah et al., 2001, 2003). Communication. Clear and effective communication is cited among the important factors required for ERP systems implementation (Achanga, Shehab, Roy, & Nelder, 2006; Al-Mashari et al., 2003; Chuang & Shaw,

2008; Law & Ngai, 2007; Sarker & Lee, 2003). Communication includes the formal promotion of ERP project team and reporting the project progress to the staff (Holland & Light, 1999). In order to avoid failures in communication, an open and honest information policy communicated to the users (Bancroft, 1996; Kumar et al., 2003; Nah et al., 2001; Sarker & Lee, 2003) and a free flow of information (Sheremata, 2000) are needed. Therefore, it is necessary to have a communication plan in place for all stages of the project which should include project goals (Al-Mashari et al., 2003; Holland & Light, 1999; Rosario, 2000; Shanks et al., 2000; Somers & Nelson, 2001), project tasks, change management strategies, and the project scope (Al-Mashari et al., 2003; Bancroft, 1996; Sumner, 1999).

Staff Staff refers to people/ human resource related issues. Three factors have been identified here as factors affecting staff: Human resource management. Qualified staff is one of the most valuable resources of every organization. The ability of an organization to implement an ERP system is largely dependent on its ability to recruit, select, place, appraise and develop appropriate employees. So, it’s crucial for organizations to exploit proper mechanisms to recruit and preserve qualified employees, and nurture and maintain a high level of employees’ morale and motivation among them (Kim, Lee, & Gosain, 2005; Metaxiotis, Zafeiropoulos, Nikolinakou, & Psarras, 2005; Skok & Legge, 2002; Umble et al., 2003; Verville et al., 2005; Willcocks & Sykes, 2000). It seems that the current situation of staff is a very effective factor in new technology developments in organizations. It is suggested that older and less educated workers will be more resistant than younger and more educated ones (Herold, Farmer, & Mobley, 1995).

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34 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

Training and education. Users’ training is another most widely cited critical success factor (Achanga et al., 2006; Al-Mashari et al., 2003; Aladwani, 2001; AmoakoGyampah & Salam, 2004; Bingi et al., 1999; Bozarth, 2006; Häkkinen & Hilmola, 2008; Ngai et al., 2008; Soja, 2006; Somers & Nelson, 2003; Umble et al., 2003; Xu & Ma, 2008; Yusuf et al., 2004). Some researchers have specifically mentioned the need for project team training (Kumar et al., 2003) while others have focused on user training (Bingi et al., 1999; Kumar et al., 2003; Mandal & Gunasekaran, 2003; Robey, Ross, & Boudreau, 2002; Trimmer, Pumphrey, & Wiggins, 2002). Training allows employees to understand the overall concepts of the ERP system. It should encompass the development of business practices and processes (Legare, 2002; Ngai et al., 2008; Robey et al., 2002), as well as IT (Tarafdar & Roy, 2003; Voordijk, Van Leuven, & Laan, 2003) and ERP skills (Stratman & Roth, 2002). Training should be a priority from the beginning of the project and required money and time resources should be allocated to it (Nah et al., 2001). Also, a proper plan for ERP training facilities (Finney & Corbett, 2007; Rao, 2000a, 2000b) and a well-documented education and training strategy (Mabert, Soni, & Venkataramanan, 2003) are other vital considerations. Project team. Project team competences is another most widely cited critical success factor (Bozarth, 2006; Finney & Corbett, 2007; Kumar et al., 2003; Mandal & Gunasekaran, 2003; Metaxiotis et al., 2005; Nah et al., 2001; Peslak, 2006; Rao, 2000b; Shanks et al., 2000; Soja, 2006; Somers & Nelson, 2001, 2004; Willcocks & Sykes, 2000). ERP project needs the best organization employees assigned to the project team (Bingi et al., 1999; Rosario, 2000; Shanks et al., 2000). Involving people with both business and technical knowledge into the project team is critical to achieve success (Al-Mashari et al., 2003; Allen, Kern, &

Havenhand, 2002; Bajwa et al., 2004; Bingi et al., 1999; King & Burgess, 2006; Shanks et al., 2000; Somers & Nelson, 2001, 2004; Sumner, 1999). The project team should be balanced, cooperative, cross functional, and have the full time basis key people (Nah et al., 2001; Rao, 2000a; Shanks et al., 2000). Their performance should be fairly compensated (Umble et al., 2003). In addition, the decision maker in the project team should be empowered to make quick and effective decisions (Shanks et al., 2000). Also, project team’s prior experience in large IT projects can be characterized as another facilitator in the project (Allen et al., 2002; Marsh, 2000). The availability of these elements in organizations or organizational capabilities in acquiring them can help achieving success in ERP projects.

Skills Skills are the distinctive competences and what the company does best (Peters & Waterman, 1982). ERP systems are complex technologies that require specialized skills. Several studies have showed that it is essential to have skilled people to assure the success of a project (Davenport, 2000; Skok & Legge, 2002; Sumner, 1999; Wateridge, 1997). Tadinen (2005) identified 7 key people in ERP project implementation team as management, IT personnel, top management, consultants, vendors, IT consultants, and end users. This classification has been selected here for investigating the situation of skill dimension. Since the focus of the study is internal factors of organizations, external key people for organization are excluded here. Also, management and top management group are merged into one as management. Hence, three key people groups as management, IT personnel, and end users are investigated: Management’s skills. Management’s skills has been identified as one of the important factors in ERP projects (Appleton, 1997; Bancroft, 1996; Kræmmergaard & Rose,

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 35

2002). Several skills are cited by researchers as required managerial skills such as political and personal skills (Walsham, 1995), communication, and team-building skills (Appleton, 1997). They should preferably have experience with ERP implementation, business and managerial skills (Bancroft, 1996). Kræmmergaard and Rose (2002) summarized ERP competences for managers as organizational, strategic, business process, project management, technology, ERP systems, human resource, leadership, and communication competences. IT staff’s skills. The IT staff’s skills are cited among the important factors required for the success of IT systems in general and ERP systems in particular (Essex, Magal, & Masteller, 1998; Esteves & Pastor, 2001; Lee & Lee, 2004). Several ERP studies (Davenport, 2000; Holland & Light, 1999; Lee & Lee, 2004; Markus & Tanis, 2000; Sumner, 1999; Willcocks & Sykes, 2000) have suggested that the skills of IT professionals must be adequate to ensure success with ERP project. It seems that IT systems are more likely to succeed in organizations where general IT skills and relevant in-house IT expertise is high (Lee & Lee, 2004). So, the availability of skilled IT professionals and their participation in the project is valuable to organization. Users’ skills. The quality of end users and their general IT skills are considered as one of the critical factors necessary for IS success (Essex et al., 1998; Lee & Lee, 2004; Peslak & Boyle, 2010; Razmi et al., 2009). It is more likely for skilled users to understand the need for process changes than less skilled ones and in organizations where users have required skills and expertise, it is reasonable to suggest that ERP implementation success will be higher compared to where such expertise is lacking (Duplaga & Astani, 2003; Essex et al., 1998; Lee & Lee, 2004).

Shared Values/Superordinate Goals The terms shared values/ superordinate goals are described as guiding concepts and fundamental ideas around which a business is built (Peters & Waterman, 1982). In ERP projects, the term refers to the degree to which a project team accepts and believes the project goals (Pinto et al., 1993). A superordinate goal enhances the likelihood of finding good quality solutions in a timely manner that should be organized in a manner that enables the project team to describe in detail what the company strives to achieve (Chien et al., 2007). Three factors have been identified here as affecting factors on shared values: Project champion. The need to have a project champion is considered as another relatively important factor (Bancroft, 1996; Legare, 2002; Nah et al., 2001; Sumner, 1999). Champions are critical to drive consensus and to oversee the entire life cycle of ERP project (Rosario, 2000). The project champion must be a high level official in the organization (Sumner, 1999). S/he must continually manage resistance and change during the implementation (Murray & Coffin, 2001). They should possess strong leadership skills (Mandal & Gunasekaran, 2003), and business, technical, personal, as well as managerial competencies (Kræmmergaard & Rose, 2002; Somers & Nelson, 2001). Hence, it can be expected that the existence of a project champion in ERP projects can enhance implementation processes and the possibility of project success. Company-wide commitment. Since ERP systems are enterprise-wide and cross functional systems, it is imperative to get support from all functional segments of an organization (Law & Ngai, 2007; Somers & Nelson, 2001, 2004; Yusuf et al., 2004; Zhang et al., 2005) and the project success

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36 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

Figure 1. Proposed framework for ERP readiness assessment

requires commitment and cooperation of personnel from all segments of the business (Zhang et al., 2003). The personnel must be convinced and justified that the organization is committed to implement the ERP system (Umble et al., 2003). They must recognize the need for change and be properly prepared for changes to prevent resistance at the implementation stage. When personnel involvement is low, they may not psychologically ready to change and accept the new ERP system (Wang & Chen, 2006). Shared beliefs. Shared beliefs refer to a belief about the overall impact of the system on the organization with regard to its benefits. It is a shared belief with employees and managers regarding the benefits of the ERP system (Amoako-Gyampah & Salam, 2004). It is believed that if employees have a shared understanding of why a technology is being implemented, it is likely to foster trust and cooperation among them that can lead to implementation success (AmoakoGyampah & Salam, 2004). Thus, it is important for managers to be aware early in the project whether different members of the organization have different perceptions on the shared beliefs about the concept

of ERP. Knowing this, they can develop mechanisms such as communication and training plans to minimize those gaps.

Developing the Conceptual ERA Framework There are many readiness models in the literature described as multidimensional constructs (Beebe, Harrison, Sharma, & Hedger, 2001; Chilenski, Greenberg, & Feinberg, 2007; Edwards, Jumper-Thurman, Plested, Oetting, & Swanson, 2000; Fathian, Akhavan, & Hoorali, 2008; Hanafizadeh, Hanafizadeh, & Khodabakhshi, 2009; Lai & Ong, 2010; Lehman, Greener, & Simpson, 2002; Razmi et al., 2009). The advantage of using multidimensional constructs is that the contribution of each dimension in a higher level construct can be assessed as compared to setting all items in a single composite score. If all items are posited in a single first-order construct, then it would be difficult to ascertain the contribution of each domain on the overall construct (Koufteros, Babbar, & Kaighobadi, 2009). With respect to this advantage, there are many multidimensional constructs proposed by authors in different subjects, but there are few multidimensional constructs in which the overall relations of the construct

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 37

Figure 2. The research steps

with its specific dimensions are well explained (Law, Wong, & Mobley, 1998). There are three ways in which multidimensional constructs can be conceptualized. First, the latent model in which multidimensional constructs exist at deeper levels than their individual dimensions. Second, the aggregate model in which multidimensional constructs are formed based on algebraic functions of their dimensions. And the third one is the profile model which designates multidimensional constructs formed as different profiles of their dimensions (Law et al., 1998). Using this taxonomy, the latent model seems relatively appropriate for defining ERP readiness construct. Latent variables cannot be directly observed and have to be assessed by observable measures. The direction of the relationship can be either from the construct to the measures known also as reflective, or from the measures to the construct known as formative measurement (Edwards & Bagozzi, 2000). Based on the review conducted on multidimensional constructs above, the readiness model are proposed as a latent or reflective multidimensional model which has 7 main dimensions or constructs with their associated factors in each. The proposed model for ERP readiness assessment is indicated in Figure 1.

RESEARCH METHODOLOGY The research steps including ERP Literature review, ERA factors extraction, instrument development, data collection, data analysis using CFA, developing the model, Extracting factor assessment questions, and finally applying the model on 2 cases is shown in Figure 2.

Instrument Development The questionnaire used for data collection contained scales to measure the various factors of the research model. The survey instrument asked the respondents to rate the impact of 23 identified factors on ERP readiness using a 7 point scale with items ranged from 1 (strongly low) to 7 (strongly high). Face or content validity of the questionnaire is conducted through the literature review and experts judgment (Straub, 1989). Content validity refers to the extent to which the items on a test adequately reflect the domain of the content for which they were written (Nunnally, 1978). To ensure this, at first six ERP project managers of high academic levels and more than 5 year experience reviewed the questionnaire. They had some comments on the length and the clarity of each

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38 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

question. Their suggestions were incorporated into the final version of the questionnaire. The content validity of the instrument was thereby addressed. Also, for evaluating the reliability of the questionnaire, test-retest method was used. Test-retest determines whether an instrument will produce the same scores from the subjects every time (Cronbach, 1951; Nunnally, 1978; Nunnally & Bernstein, 1994; Peter, 1979). For conducting test- retest method, authors asked 15 project managers in a 14-day interval to participate in the study. The resulted Cronbach alpha estimated to be 0.87 (greater than 0.7) that implies good reliability of the instrument (Nunnally, 1978).

Data Collection Since readiness assessment factors are diverse in organization, human, and technical contexts, it needs experts familiar with all 7 main dimensions to do data gathering. It seems that project managers involved in business and technical issues in ERP projects are so familiar with success and failure causes of these projects and have the highest merit to participate in the research. Hence, the target of this study was ERP project managers in organizations that had adopted a reputable ERP system located in Iran. In order to gather data from the eligible experts, the following procedure was performed: first, the eligible firms and related project managers were identified and their contact information were gathered; second, authors asked their project managers to participate in the study; third, the questionnaire were sent to them, and finally, they filled the questionnaire. Totally, 237 questionnaires were sent, 159 questionnaires were gathered and 153 usable questionnaires were used for the analysis. The response rate was 0.67.

Data Analysis Method The Structural Equation Modeling (SEM) approach was used to validate the research model. SEM is a powerful multivariate data analysis tool that estimates a complete model incorporating both measurement and structural

considerations (Kelloway, 1998). Confirmatory Factor Analysis (CFA) is a widely used application of SEM to test the construct. It is one of the most prevalent SEM techniques in the evaluation especially in the social and behavioral sciences (Mueller, 1996). Here, CFA using LISREL 8.54 (Jöreskog & Sörbom, 1989) was employed to perform the analysis. Prior to factor analysis, a test was conducted to verify the adequacy of the data for CFA. The Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy is a popular measure for assessing the extent to which the indicators of a construct belong together (Kaiser, 1974). The KMO is 0.73 which is above the “Mediocre” threshold of 0.5 (Kaiser, 1974). Large values for the KMO indicate that a factor analysis of the variables is a good idea.

RESULTS The results of data analysis consist of three main sections as first order CFA, second order CFA, and proposing the ERA framework. Furthermore, theoretical comparison of the proposed framework with available models is conducted in this part.

First Order CFA First order CFA has been performed for assessing measurement model, construct validity, convergent validity, and discriminant validity. The concern of construct validity is that instrument items selected for a given construct are, considered together, a reasonable operationalization of the construct (Cronbach & Meehl, 1968). It can be examined by observing the factor loading of each item. A factor loading of less than 0.40 signifies lack of reliability, in which case the item should be dropped (Hinkin, 1995). Just 2 out of 23 items dropped from the initial items namely “centralization” and “specialization” both belonging to structure construct. It might be because of that there is a high level of covariance among formalization, centralization and specialization factors. Generally, high levels of formalization may lead to

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 39

high levels of centralization in the organization and more distinct and specialized functions or tasks, implying high levels of specialization. Convergent validity adds to our confidence in measuring a variable. Convergent validity means the items measuring the variable are indeed theoretically related to each other and the relation is confirmed if the items within the construct are significantly correlated with one another, particularly when compared to items in other constructs. The presence of convergent validity can be determined using multiple indicators. This is often done by examining the composite reliabilities of the constructs. Measures exceeding 0.70 are generally recommended (Bagozzi & Yi, 1988; Fornell & Larcker, 1981; Hair, Anderson, Tatham, & Black, 1995; Nunnally, 1978). Construct reliability can be further assessed using cronbach alpha exceeding 0.70 (Bagozzi & Yi, 1988; Hair et al., 1995; Nunnally, 1978) and Average Variance Extracted (AVE) exceeding 0.50 (Fornell & Larcker, 1981). In this study, cronbach alpha values ranged from 0.77 to 0.89, and all AVE values were above 0.53, providing strong evidence of measure reliability. Discriminant validity refers to the degree to which measures of different constructs are distinct from each other (Hair et al., 1995). For adequate discriminant validity the square root of AVE must exceed the correlations of the constructs (Chin, 1998; Fornell & Larcker, 1981; Gefen & Straub, 2005) which AVE reflects the variance captured by the factors here. In Table 5, all results are summarized and appear to be acceptable as well as significant. Table 6, summarizes the results of discriminant validity of constructs. As it can be seen from the table, all of these values exceed the correlation values of the constructs. Hence, it can be inferred that identified factors (items) are good measures for McKinsey dimensions (constructs).

Second Order CFA The results of first order CFA imply that identified factors are good measures for McKinsey dimensions. The goal of second order CFA is

to assess whether McKinsey dimensions are good measurements for ERA or not. To this end, second order CFA has been conducted. Perhaps the greatest advantage of CFA using LISREL is that it offers an index of how well the proposed model fits the given data set (Greenspoon & Saklofske, 1998). The result of the analysis is shown in Figure 3. As can be seen from the figure, all loading values are exceeding the threshold value of 0.4. Considering the complexity of the model, eight fit indices were used as goodness of fit index (GFI), adjusted goodness of fit index (AGFI), comparative fit index (CFI), normed fit index (NFI), non-normed fit index (NNFI), p- value, root mean square error of approximation (RMSEA), and χ2/df which are very common in the literature. The results of the analysis and accepted thresholds are summarized in Table 7. As can be seen from Table 7, all indices are significant. Totally, the results of both first and second order CFA imply that the first order factors are good measures for McKinsey dimensions and the dimensions are good measures for the ERA construct.

Developing the Practical ERA Framework Based on the results obtained in the first and second order CFA, the readiness model is proposed as a latent multidimensional model which has 7 main dimensions or constructs with 3 associated factors in each. Also, for enhancing the applicability of the model, authors have identified and proposed some questions extracted from the literature for assessing the current situation of every factor. These questions are more assessable through organizations even by less specialized people. The factors, associated assessment questions, and their references are appeared in appendix A. Based on these questions, a questionnaire is developed which is appeared in appendix B. There are at least 3 questions for assessing every factor and there are qualitative as well quantitative questions in the questionnaire. The higher values in the scores for all of the questions are desired.

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40 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

Table 5. Factor Loading (FL), Cronbach Alpha (CA), Composite Reliabilities (CR), and AVE Results Mckinsey Dimensions

Factors or Items

FL

CA

CR

AVE

Strategy (STG)

Vision and mission (STGVIS)

0.85

0.81

0.83

0.62

Goals/ objectives (STGOBJ)

0.60

Strategic IT plans (STGSTG)

0.77

Formalization (STGFRM)

0.70

0.77

0.77

0.53

0.79

0.79

0.56

0.82

0.83

0.62

0.89

0.89

0.72

0.86

0.87

0.68

0.81

0.83

0.62

Structure (STR)

Systems (SYS)

Style (STY)

Staff (STF)

Skills (SKL)

Shared Values (SHV)

Size (STGSIZ)

0.69

CIO position (STGCIO)

0.79

IT Infrastructure (SYSINF)

0.62

Business processes (SYSPRC)

0.87

Data (SYSDAT)

0.74

Top management support (STYMNG)

0.91

Communication (STYCOM)

0.76

Organizational culture (STYCUL)

0.68

Human resource management (STFMNG)

0.84

Training and education (STFLRN)

0.91

Project team (STFTEM)

0.80

Management’s skills (SKLMNG)

0.73

IT staff’s Skills (SKLITP)

0.85

Users’ skills (SKLUSR)

0.89

Shared beliefs (SHVBLF)

0.60

Company-wide commitment (SHVCOM)

0.82

Project champion (SHVCHM)

0.91

Table 6. Discriminant validity of the constructs (square root of the AVE and correlations) Shared Values

Structure

Shared values

0.80

Structure

0.42

0.73

Strategy

Systems

Style

Staff

Strategy

0.53

0.52

0.75

Systems

0.43

0.42

0.42

0.75

Style

0.41

0.36

0.39

0.40

0.79

Staff

0.43

0.30

0.45

0.37

0.39

0.85

Skills

0.44

0.31

0.45

0.35

0.43

0.44

Skills

0.82

Note: (a) The bold fonts in the leading diagonals are the square root of AVEs, (b) off-diagonal elements are correlations among constructs.

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 41

Figure 3. The results of second order CFA

Table 7. The results of goodness of fit assessments and accepted thresholds Fit Indices

Observed Values

Accepted Thresholds

Reference

GFI

0.93

> 0.90

(Chau, 1997; Segars & Grover, 1993)

AGFI

0.91

> 0.80

(Chau, 1997; Segars & Grover, 1993)

CFI

0.94

> 0.90

(Hatcher, 1994)

NFI

0.92

> 0.90

(Bentler & Bonett, 1980; Chau, 1997)

NNFI

0.93

> 0.90

(Chau, 1997)

p- value

0.09

> 0.05

(Hu & Bentler, 1998)

RMSEA

0.054

< 0.06

(Hu & Bentler, 1998)

χ2/df

1.47

< 3.00

(Chau, 1997; Segars & Grover, 1993)

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42 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

Table 8. The result of the theoretical comparison of the proposed framework with available models Mckinsey Dimensions Strategy

Structure

Factors

Best Framework

Razmi’s Framework

• Vision and mission

•-

• ERP implementation vision

•-

• Goals/ objectives

• Strategy and goals

• ERP mission and goals • Project scope

•-

• Strategic IT plans

•-

•-

•-

• Formalization

• Structure (tasks, authorities and responsibilities)

• Organizational structure

•-

• Size

• Availability of resources

• CIO position Systems

Style

Staff

Skills

Raymond’s Framework

•-

• IT infrastructure

• Structure of the enterprise system

• Existing systems

• Sophistication of existing IT use

• Business processes

• Process

• Existing processes

• Operational methods • Procurement methods • Operational business processes • Managerial business processes • Integration of business processes

• Data

•-

• Decision mechanism

•-

• Top management support

• Management

• Top management • Resource allocation • Assign responsibilities

•-

• Communication

•-

• Communication

•-

• Organizational culture

•-

• Culture

•-

• Human resource management

•-

• Personnel

•-

• Training and education

•-

•-

•-

• Project team

•-

• Project team

•-

• Management’s skills

• Knowledge and skills

•-

•-

•-

•-

•-

•-

• IT staff’s skills • Users’ skills

continued on following page

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 43

Table 8. continued Shared Values

-

• Shared beliefs

• Social dynamics

•-

• Perception of the complexity/ cost of ERP • Perception of benefits/ strategic advantage of ERP • Desire to implement ERP

• Company-wide commitment

•-

•-

•-

• Project champion

•-

• Project championship

•-

•-

•-

•-

• Competitive strategy • Business environment • power of customers

The scores of factors are achieved by doing a simple average on the scores of associated questions. Then, based on the weights achieved in second order CFA (Figure 3) the readiness of each dimension and finally the ERP readiness of the enterprise can be assessed (Diamantopoulos, Riefler, & Roth, 2008). Since, the assessment questionnaire is based on a 5 point scale, the score of every question is a value between minimum 0 and maximum 1 (0-0.25-0.50-0.75-1). For example, suppose that the average readiness score achieved through assessment questionnaire are 0.27, 0.28, and 0.76 for STGVIS, STGOBJ, and STGSTG factors, respectively. Since weighing values of the factors are 0.84, 0.65, and 0.66 (Figure 3), the readiness score for the strategy construct is calculated as below: (0.84×0.27+0.65×0.28+0.66×0.76)/ (0.84×1+0.65×1+0.66×1) = 0.42 It is clear that the values of “1” in the denominator, demonstrates the maximum scores achievable in the assessment (scores ranged from 0 to 1). The method is the same for other factors and dimensions. It is clear that the final score for ERP readiness construct will be a number between 0 and 1.

Theoretical Comparison of the Proposed Framework with Available Models In this section, a comparison is done among proposed framework and available frameworks. This comparison not only highlights the weaknesses of available frameworks in covering a comprehensive set of factors affecting organization readiness, but also indicates the strength, comprehensiveness, and applicability for the purpose of the proposed framework. The result of the comparison is summarized in Table 8. As can be seen from Table 8, there are some issues that have not been addressed in available frameworks. In a first look, it can be said that 21 related factors in the proposed framework made it more comprehensive than the available models with their less articulated factors. It is obviously noticeable especially in the soft factors like skills and staff contexts. It is clear that available frameworks are focused on some key aspects of the readiness concept using their own viewpoint, not a holistic approach. The privilege of using 7S model in the proposed framework over available frameworks is that it encompasses different aspects of every organization needed to being studied in such an assessment. Also, Raymond’s framework has noticed some

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44 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

external and environmental factors that have not been studied in the proposed framework. The reason is that 7S model naturally concentrates on inter-organizational factors, not external ones that are out of the control of an organization and are somehow the same for all organizations. Therefore, external factors have not been studied here. Another advantage of the proposed framework over others is that it provides an 85 item self-assessment questionnaire, thoroughly extracted from the literature that can be fulfilled by organizations for assessing their ERP readiness. Also, the proposed framework enjoys drill down capability which can show weakness points of the organization. This can help organizations directly focus on their weaknesses and find solutions for improving them. Through this, organizations can drill down their weakness areas from 7S dimensions to factors and from factors to their associated assessment questions. All of these imply high applicability of the framework compared to available ERP readiness frameworks.

ILLUSTRATIVE EXAMPLES Banking industry is heavily dependent upon IT (Chowdhury, 2003) and is considered as the most IT-intensive industry in the USA (Berger, 2003). These systems have penetrated in Iranian banking industry over the last decade, too. In this respect, 2 Iranian banks are selected as the illustrative examples of the paper. Bank A has been established in 1980. It is one of the greatest Iranian state banks that provide service to more than 15 million customers through approximately 1900 branches, 2500 Automated Teller Machine (ATM), and 19 million customer cards. The number of employees is 25,000. Also, bank B as one of the greatest Iranian private banks has been established in 1988. The bank serves more than 6.2 million customers through approximately 600 branches, 650 ATM, and 10 million customer cards. The number of employees is almost 6,500.

Both banks have implemented some island and disintegrated systems in their back office (or staff vs. line). To overcome the problem, managements of both banks care ERP implementation. Hence, the readiness assessment of these two banks for ERP implementation is conducted here to gain the model validity. For investigating readiness situation of the banks, 3 IT managers with extensive experience in a number of large IT projects in each bank are consulted. These experts are interviewed in general organizational subjects as well as technical issues. Then, based on the results of these interviews and referring to some of the related organizational documents such as number of employees, annual revenues, and budgeting values, the assessment questionnaire was filled. It has been tried to achieve a sufficient level of consensus among experts in filling qualitative questions. The results of these efforts are exhibited in Table 10. The readiness score is calculated in a way that is illustrated before. The final readiness scores are also calculated in the same way. The method is illustrated as an example for the factors of the strategy dimension in Table 9. The scores of factors (e.g., 0.08 for vision and mission factor) are the simple average scores of related questions (0.25, 0, and 0 for the questions of vision and mission). For calculating the scores of dimensions, it needs connection weights (Figure 3). With regard to weighing values of the factors (0.84, 0.65, and 0.66) and their related scores (0.08, 0.10, and 0.70), the readiness score for the strategy construct is calculated as below as an example: (0.84×0.08+0.65×0.10+0.66×0.70)/ (0.84×1+0.65×1+0.66×1) = 0.28 Hence, the readiness score of the strategy dimension for Bank A is 0.28. The method is the same for other constructs and factors. The final scores of bank A and bank B is 0.57 and 0.51, respectively, implying almost similar readiness situation. Considering the very weak situations in some factors (e.g., goals/

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 45

objectives), one can infer that they should go to plan and do some pre-implementation projects. Hence, both cases need special attention on some factors. Finally, readiness scores for 7 dimensions of the two cases are appeared as a radar diagram in Figure 4. It is clear from the figure that the readiness scores of bank A are greater than relevant scores of bank B in all of the 7 dimensions, except for the strategy dimension and both banks face real challenges in strategy and staff dimensions.

DISCUSSION The results presented in Table 10 show that the overall readiness of constructs “structure” and “shared values” look well for two cases. Besides, there are no considerable weaknesses

in their subsequent factors. However, regarding the results, both banks face crucial challenges in some dimensions and should plan to conduct some short term projects in order to improve the ERP system adaption. For instance, both banks face real challenges in their human resources training and education situation. It is strongly needed to develop a proper training strategy and plan. Training programs should be arranged for the personnel and it must be tried to familiarize them with the project. It is suggested to focus on business processes and IT fundamental trainings as well as ERP concepts trainings. Using e-learning tools can facilitate learning process in both banks. Also, it is strongly recommended to revise the existing rules and procedures for employees’ recruitment especially in the ERP project team members in order to build a strong project team.

Table 9. The results of the ERA for the strategy dimension in Bank A Factors

Question

Questions

Factors

Vision And Mission

1. Existence of the documented vision and mission of the ERP project

0.25

0.08

2. The degree to which vision and mission of the ERP project are well-understood across the organization

0

3. Existence of the business plan including a justification for the investment

0

4. Existence of the carefully defined goals of the ERP system

0.25

Goals/ Objectives

Strategic IT Plans

Scores*

5. Existence of the measurable goals of the ERP system

0

6. The degree to which goals of the ERP project are well-understood across the organization

0

7. Existence of the carefully defined project scope

0.25

8. Established realistic and achievable milestones for the ERP project

0

9. The degrees to which information technology systems of the firm support its strategic goals

0.5

10. Existence of the continuous and up to date strategic IT plans

0.75

11. Existence of the written guidelines to structure strategic IT plans in the organization

0.50

12. The degree to which top management is involved in strategic IT plans

0.75

13. Existence of inputs from all functional areas of the strategic IT plans

1

0.10

0.70

*Values range from 0 to1.

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46 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

Figure 4. Radar diagram for readiness scores in 7 dimensions for the two cases

In the case of strategy dimension, project vision, mission, and goals must be clearly defined in both banks. The project scope, affected business processes and functional units involved in the project should be determined prior to project start-up. It should be wellcommunicated and understood throughout the banks using open communication tools and methods. Bank A conducted its IT master plan 2 years ago. There were no review of its IT and business plans and strategic goals after that. So, the bank should evaluate and refine its business goals and define the IT capabilities required to support these goals. Bank B looks good in its IT strategic plans. It is mainly due to the fact that this bank recently conducted enterprise architecture project and has documented and updated its business and IT plans. Another relative weakness area in both cases is related to the situation of systems dimension. One of the main data issues is related to data accuracy and completeness. It means that organizational data stored in databases is not proper, regarding information fields supposed to be filled. For example, the specifications of IT assets or other organizational assets in both banks is not properly filled in the forms and sometimes is not accurate. The same situation happens for human resources and financial data. It is said that garbage in garbage out in ERPs. So, as a first step, all information fields in the current information systems should be checked and completely re-filled if required. Another data problem relates to data integration. One of the main data-related problems in both banks

is that organizational data are spread across several separate databases that make integrating databases a real challenge. With respect to this kind of problems, it is strongly recommended that both banks involve in the cleaning up of suspect data, matching, reformatting, and updating information from one system to prevent the problems arises from data inconsistencies. Also, data in their systems should be validated and converted into a single and consistent format before going to implement the system. Educating users on the importance of data accuracy and correct data entry procedures should also be another top priority. Another weakness area identified through readiness assessment is related to user’s skills. IT skills are reported in a medium situation and both banks need some plans to improve them. It can be made possible through employing new highly educated and qualified employees as well as conducting training programs for current personnel. Regarding the time, budget and human resources constraints of the two cases, the suggested projects can be planned and implemented in a short term period. Weaker areas should be concentrated upon. The improvements achieved in readiness levels can be evaluated by re-performing the assessment after a few months.

CONCLUSION This paper, first, elaborated on the importance of readiness assessment prior to initiating an ERP project. It was shown that this is a complex task,

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 47

Table 10. Readiness assessment scores for 2 cases Dimensions Strategy

Structure

Systems

Style

Staff

Skills

Shared Values

Dimension Scores Bank A

Bank B

0.28

0.34

0.81

0.59

0.62

0.38

0.63

0.70

Factors

0.72

0.29

Bank A

Bank B

Vision and mission

0.08

0.08

Goals/ objectives

0.10

0.10

Strategic IT plans

0.70

0.90

Formalization

0.75

0.67

Size

0.92

0.67

CIO position

0.75

0.83

IT infrastructure

0.75

0.67

Business processes

0.50

0.67

Data

0.50

0.33

Top management support

0.81

0.69

0.55

0.54

Factor Scores

Communication

0.50

0.42

Organizational culture

0.55

0.50

Human resource management

0.42

0.33

Training and education

0.11

0.07

Project team

0.55

0.40

Management’s skills

0.75

0.58

IT staff’s skills

0.71

0.63

Users’ skills

0.46

0.38

0.52

0.64

Shared beliefs

0.75

0.58

Company-wide commitment

0.58

0.58

Project champion

0.75

0.75

not only because of the newness of the system to the organization, but also due to many different aspects that need to be considered at the same time. One of the main problems in ERP projects is focusing on technical and financial aspects of a project and neglecting to take into account the non-technical issues like people (Botta-Genoulaz & Millet, 2006), while many information systems studies indicate that failure is largely due to organizational and social, rather than technical factors. Therefore, in order to appropriately deal with this problem, McKinsey 7S model has been employed due to its

comprehensiveness in covering organizational diverse dimensions. These 7 dimensions include “structure”, “strategy”, “systems”, “skills”, “style/ culture”, “staff”, and “shared values”. 23 factors contributing to these dimensions have been identified after an in-depth study on ERP literature. Then, first and second order CFA were conducted on the data gathered using questionnaire from 153 ERP project managers in organizations that have adapted a reputable ERP system located in Iran. Based on the results of CFA, ERP readiness assessment framework has been proposed based

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48 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

on the 7S McKinsey model with 21 associated factors. In order to enhance the applicability of the model, 85 questions were extracted from the literature for assessing the associated factors in readiness model. Using this framework, the current state of readiness of an organization to implement an ERP project and possible areas of improvements can be identified prior to system implementation. The proposed framework was then applied to two Iranian banks. With regard to the readiness assessment results, it was suggested that the banks are better to do some preliminary projects to increase the probability of project success prior to initiating the ERP project. It is noted that the cost of using such frameworks is justifiable for an enterprise compared to the huge costs of implementing an ERP system and even probable costs of the project failure. In addition, some comparisons were done among available frameworks and the proposed framework. It has been shown that the framework has some advantages over available frameworks such as comprehensiveness, multi-dimensionality, and higher applicability. Another contribution of the work is that it incorporates McKinsey 7S model with the concept of ERP readiness assessment. Finally, it is noted that the value of ERP readiness assessment in organizations is not achieving a value as ERP readiness score, but identifying probable gaps and proposing some improvement plans in weakness areas. However, the score can be useful in identifying the extent of gaps between organizations’ As-Is and To-Be situation in assessment dimensions, factors, and questions. Also, this score can be used in making managerial decisions on initiating the ERP project regarding current situation.

LIMITATIONS AND FUTURE RESEARCH One of the main limitations of the work is that the model is developed and validated for organizations located in Iran and generalizing it to organizations abroad is left for future works.

Another limitation is the limited number of available ERP experts specially project managers as a result of low degree of ERP penetration in organizations to date in Iran. This limitation made data gathering a tremendous effort for authors. Future works can be done in assessing readiness of different organization in diverse industries that can be helpful in fine-tuning of the framework. Also, future works may follow to investigate the target or To-Be situation of each dimension or factor for encountering the least potential problems. They may concentrate on benchmarking the readiness assessment results with pioneering companies to gauge where they are (in terms of ERP readiness) with respect to their competitors. In other words, the desirable level of dimensions, factors and even assessment questions might be investigated in future works.

ACKNOWLEDGMENTS The authors would like to thank the anonymous reviewers and the editor for their insightful comments and suggestions

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Payam Hanafizadeh is an Assistant Professor of Industrial Management at Allameh Tabataba'i University in Tehran, Iran and a member of the Design Optimization under Uncertainty Group at the University of Waterloo, Canada. He was a visiting research fellow at the University of Canberra, Australia in 2010 and a visiting scholar at the University of Waterloo, Canada in 2004. He received his MSc and PhD in Industrial Engineering from Tehran Polytechnic University and pursues his research in Information Systems and Decision-making under Uncertainty. He has published in such journals as the Information Society, Systemic Practice and Action Research, Management Decision, Journal of Global Information Management, Telecommunications Policy, Mathematical and Computer Modeling, Expert Systems with Applications, International Journal of Information Management, Energy Policy to name only a few. Ahad Zare Ravasan is a PhD student in Information Technology Management in the School of Management and Accounting at Allameh Tabataba’i University in Tehran, Iran. His research interests include ERPs, artificial neural networks, and business intelligence.

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 57

APPENDIX A. Table 11. Factors Vision and Mission

Goals/ Objectives

Strategic IT plans

Formalization

Size

CIO Position

IT Infrastructure

Business Processes

Data

Questions

Scale

1. Existence of documented vision and mission of the ERP project

Very Low to Very High

2. The degree to which vision and mission of the ERP project are well understood across the organization

Very Low to Very High

3. Existence of business plan including a justification for the investment

Very Low to Very High

4. Existence of carefully defined goals of the ERP system

Very Low to Very High

5. Existence of measurable goals of the ERP system

Very Low to Very High

6. The degree to which goals of the ERP project are well understood across the organization

Very Low to Very High

7. Existence of carefully defined project scope

Very Low to Very High

8. Established realistic and achievable milestones for the ERP project

Very Low to Very High

9. The degrees to which information technology systems of the firm support the strategic goals of the firm

Very Low to Very High

10. Existence of continuous and up to date strategic IT plans

Very Low to Very High

11. Existence of written guidelines to structure strategic IT plans in the organization

Very Low to Very High

12. The degree to which top management is involved in strategic IT plans

Very Low to Very High

13. Existence of inputs from all functional areas the strategic IT plans

Very Low to Very High

14. The degree to which rules and procedures are clearly documented

Very Low to Very High

15. The degree to which rules and procedures are made known to all employees

Very Low to Very High

16. The degree to which rules and procedures are considered in decision making

Very Low to Very High

17. Number of employees

(10000)

18. Annual revenues (in million US $)

(1000)

19. Availability of human and financial resources assigned to the project

Very Low to Very High

20. Existence of empowered CIO in the organization

Very Low to Very High

21. Existence of CIO reporting directly to the CEO

Very Low to Very High

22. Existence of strategic rather than supportive role of the CIO in the organization.

Very Low to Very High

23. Existence of adequate hardware infrastructure.

Very Low to Very High

24. Existence of adequate software and application

Very Low to Very High

25. Existence of adequate networking infrastructure

Very Low to Very High

26. Existence of documented business processes

Very Low to Very High

27. Existence of business processes improvements

Very Low to Very High

28. Existence of Business process understanding and perception among people

Very Low to Very High

29. Existence of high quality and accurate data

Very Low to Very High

30. Existence of data structures converted into a single one

Very Low to Very High

31. Existence of data quality control methods.

Very Low to Very High

continued on following page

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58 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

Table 11. continued Top Management Support

Communication

Organizational Culture

Human Resource Management

Training and Education

Project Team

32. The degree to which functional managers willingly assign resources to the ERP project as they are needed

Very Low to Very High

33. The degree to which the need for long-term ERP support resources is recognized by management

Very Low to Very High

34. The degree to which executive management is enthusiastic about the possibilities of ERP

Very Low to Very High

35. The degree to which all levels of management support the overall goals of the ERP project

Very Low to Very High

36. The degree to which open and honest information policy is communicated to the users

Very Low to Very High

37. Existence of free flow of information in the organization

Very Low to Very High

38. Existence of the scope, objectives, and change management strategies, in the communication plan

Very Low to Very High

39. Existence of a learning and development culture

Very Low to Very High

40. Existence of a participative decision making culture

Very Low to Very High

41. Existence of a support and collaboration culture

Very Low to Very High

42. Existence of a power sharing culture

Very Low to Very High

43. Existence of tolerance for conflicts and risk culture

Very Low to Very High

44. Existence of proper mechanisms to recruit and preserve qualified employees, nurture and maintain a high levels of employee morale and motivation among them

Very Low to Very High

45. Existence of high rate of younger employees in the organization (The number of employees with less than 30 years old per total)

(41)

46. Existence of the high rate of more educated employees in the organization (The number of employees with BS or higher educational degrees per total)

(41)

47. Existence of planning for ERP training facilities

Very Low to Very High

48. Existence of a clear education and training strategy

Very Low to Very High

49. Existence of the identified training needs.

Very Low to Very High

50. Existence of a formal training program to meet the requirements of ERP system users

Very Low to Very High

51. Existence of customized training materials for each specific job.

Very Low to Very High

52. Targeting the entire business task, not just the ERP screens and reports by training materials

Very Low to Very High

53. The degree to which users have been trained in basic ERP system skills (training hours per employee)

(41)

54. Existence of the both business and technical knowledge into the project team

Very Low to Very High

55. Existence of a balanced, cooperative, cross functional and full time project team

Very Low to Very High

56. The degree to which project team performance is fairly compensated

Very Low to Very High

57. Existence of the empowered project team members.

Very Low to Very High

58. The degree to which project team have prior experience in large IT projects.

Very Low to Very High

continued on following page

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 59

Table 11. continued Management’s Skills

IT Staff’s Skills

Users’ Skills

Shared Beliefs

Company-Wide Commitment

Project Champion

59. Existence of communication skills

Very Low to Very High

60. Existence of controlling skills

Very Low to Very High

61. Existence of leadership skills

Very Low to Very High

62. Existence of planning skills

Very Low to Very High

63. Existence of IT management skills

Very Low to Very High

64. Existence of interpersonal skills

Very Low to Very High

65. Existence of communication skills

Very Low to Very High

66. Existence of IT management skills

Very Low to Very High

67. Existence of planning skills

Very Low to Very High

68. Existence of technical skills

Very Low to Very High

69. Existence of ERP experience

Very Low to Very High

70. Existence of controlling skills

Very Low to Very High

71. Existence of interpersonal skills

Very Low to Very High

72. Existence of communication skills

Very Low to Very High

73. Existence of planning skills

Very Low to Very High

74. Existence of technical skills

Very Low to Very High

75. Existence of ERP experience

Very Low to Very High

76. Existence of controlling skills

Very Low to Very High

77. The extent to which employees believe in the benefits of the ERP system.

Very Low to Very High

78. The extent to which management team believe in the benefits of the system.

Very Low to Very High

79. The extent to which employees and management believe in the benefits of the system is alike

Very Low to Very High

80. The extent to which project gets support all functional segments of the organization.

Very Low to Very High

81. The extent to which organizational overall goals are preferred to individual segments goals

Very Low to Very High

82. The extent to which personnel involvement and participation in the project are assured

Very Low to Very High

83. Existence of the proper project champion in the organization

Very Low to Very High

84. Existence of the business, technical, personal, and managerial competencies of the project champion

Very Low to Very High

85. Existence of a project champion with high official level in the organization

Very Low to Very High

continued on following page

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60 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

APPENDIX B. The structure of the ERP readiness assessment questionnaire (Using 5 point scale, with values 0, 0.25, 0.50, 0.75, 1). Table 12. .

Factors

Question

Reference

Vision and Mission

1. Existence of the documented vision and mission of the ERP project

(Buckhout et al., 1999; Holland & Light, 2001).

2. The degree to which vision and mission of the ERP project are well understood across the organization

(Shanks et al., 2000; Somers & Nelson, 2001).

3. Existence of the business plan including a justification for the investment

(Holland & Light, 1999; Nah et al., 2003; Zhang et al., 2003)

4. Existence of the carefully defined goals of the ERP system

(Razmi et al., 2009; Soja, 2008).

5. Existence of the measurable goals of the ERP system

(Al-Mashari et al., 2003).

6. The degree to which goals of the ERP project are well understood across the organization

(Shanks et al., 2000; Somers & Nelson, 2001).

7. Existence of the carefully defined project scope

(Bajwa et al., 2004; Bingi et al., 1999; Holland & Light, 1999; Rosario, 2000; Shanks et al., 2000; Somers & Nelson, 2001).

8. Established realistic and achievable milestones for the ERP project

(Al-Mashari et al., 2003; Bajwa et al., 2004; Holland & Light, 1999; Murray & Coffin, 2001; Shanks et al., 2000).

9. The degrees to which information technology systems of the firm support the strategic goals of the fir.

(Fiedler, Grover, & Teng, 1996; Sampler, 1998).

10. Existence of continuous and up to date strategic IT plans

(Stratman & Roth, 2002).

11. Existence of written guidelines to structure strategic IT plans in the organization

(Stratman & Roth, 2002).

12. The degree to which top management involves in strategic IT plan.

(Stratman & Roth, 2002).

13. Existence of inputs from all functional areas the strategic IT plans

(Stratman & Roth, 2002).

14. The degree to which rules and procedures are clearly documented.

(Daft, 1998; Robbins, 1991).

15. The degree to which rules and procedures are made known to all employees

(Daft, 1998; Robbins, 1991).

16. The degree to which rules and procedures are considered in decision making

(Daft, 1998; Robbins, 1991).

Goals/ Objectives

Strategic IT Plans

Formalization

Size

17. Number of employees

(Kimberly, 1976; Swamidass & Kotha, 1998).

18. Annual revenues

(Choe, 1996; Ein-Dor & Segev, 1978; Raymond, 1990).

19. Availability of human and financial resources assigned to the project

(Grover, Jeong, Kettinger, & Teng, 1995; Nah & Delgado, 2006; Reel, 1999; Remus, 2007).

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 61

Table 12. continued CIO Position

IT Infrastructure

20. Existence of empowered CIO in the organization

(Chun & Mooney, 2009).

21. Existence of CIO reporting directly to the CEO

(Chun & Mooney, 2009).

22. Existence of strategic rather than supportive role of the CIO in the organization.

(Chun & Mooney, 2009; Willcocks & Sykes, 2000).

23. Existence of adequate hardware infrastructure

(Al-Mashari, 2003; Al-Mashari et al., 2003; Chuang & Shaw, 2008; Finney & Corbett, 2007; Jarrar et al., 2000; Ngai et al., 2008; Peslak, 2006; Soja, 2006; Umble et al., 2003; Verville et al., 2005).

24. Existence of adequate software and application 25. Existence of adequate networking infrastructure Business Processes

Data

Top Management Support

Communication

Organizational Culture

26. Existence of documented business processes

(Bingi et al., 1999; Yang et al., 2007).

27. Existence of business processes improvements

(Bingi et al., 1999; Yang et al., 2007).

28. Existence of understanding of business process among people.

(Ho & Lin, 2004; Motwani et al., 2005; Murray & Coffin, 2001; Ward et al., 2005).

29. Existence of high quality and accurate data

(Bajwa et al., 2004; Somers & Nelson, 2001, 2004; Umble et al., 2003; Xu et al., 2002; Yusuf et al., 2004; Zhang et al., 2005).

30. Existence of data structures converted into a single one

(Somers & Nelson, 2004).

31. Existence of data quality control methods

(Xu et al., 2002).

32. The degree to which functional managers willingly assign resources to the ERP project as they are needed

(Stratman & Roth, 2002).

33. The degree to which the need for long-term ERP support resources is recognized by management

(Stratman & Roth, 2002).

34. The degree to which executive management is enthusiastic about the possibilities of ERP

(Stratman & Roth, 2002).

35. The degree to which all levels of management support the overall goals of the ERP project

(Stratman & Roth, 2002).

36. The degree to which open and honest information policy communicated to the users

(Bancroft, 1996; Kumar et al., 2003; Nah et al., 2001; Sarker & Lee, 2003).

37. Existence of free flow of information in the organization

(Sheremata, 2000)

38. Existence of the scope, objectives, and change management strategies, in the communication plan

(Al-Mashari et al., 2003; Bancroft, 1996; Holland & Light, 1999; Rosario, 2000; Shanks et al., 2000; Somers & Nelson, 2001; Sumner, 1999).

39. Existence of the learning and development culture

(Ke & Wei, 2008).

40. Existence of the participative decision making culture

(Ke & Wei, 2008).

41. Existence of the support and collaboration culture

(Ke & Wei, 2008).

42. Existence of the power sharing culture

(Ke & Wei, 2008).

43. Existence of the tolerance for conflicts and risk culture

(Ke & Wei, 2008).

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62 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011

Table 12. continued Human Resource Management

44. Existence of the proper mechanisms to recruit and preserve qualified employees, nurture and maintain a high levels of employee morale and motivation among them

(Bingi et al., 1999; Kim et al., 2005; Metaxiotis et al., 2005; Skok & Legge, 2002; Trimmer et al., 2002; Umble et al., 2003; Verville et al., 2005; Willcocks & Sykes, 2000).

45. Existence of the high rate of younger employees in the organization

(Herold et al., 1995).

46. Existence of the high rate of more educated employees in the organization

(Herold et al., 1995).

47. Existence of the planning for ERP training facilities.

(Finney & Corbett, 2007; Rao, 2000a, 2000b)

48. Existence of the clear education and training strategy

(Mabert et al., 2003).

49. Existence of the identified training needs.

(Stratman & Roth, 2002).

50. Existence of a formal training program to meet the requirements of ERP system users

(Stratman & Roth, 2002).

51. Existence of customized training materials for each specific job

(Stratman & Roth, 2002).

52. Targeting the entire business task, not just the ERP screens and reports by training materials

(Stratman & Roth, 2002).

53. The degree to which users have been trained in basic ERP system skills

(Stratman & Roth, 2002).

54. Existence of the both business and technical knowledge into the project team

(Al-Mashari et al., 2003; Allen et al., 2002; Bajwa et al., 2004; Bingi et al., 1999; King & Burgess, 2006; Shanks et al., 2000; Somers & Nelson, 2001, 2004; Sumner, 1999).

55. Existence of a balanced, cooperative, cross functional and full time project team

(Nah et al., 2001; Rao, 2000a; Shanks et al., 2000)

56. The degree to which project team performance fairly compensated

(Umble et al., 2003).

57. Existence of the empowered project team members.

(Finney & Corbett, 2007; Shanks et al., 2000)

58. The degree to which project team have prior experience in large IT projects

(Allen et al., 2002; Marsh, 2000).

Management’s Skills

59. Existence of communication skills 60. Existence of controlling skills 61. Existence of leadership skills 62. Existence of planning skills 63. Existence of IT management skills 64. Existence of interpersonal skills

(Tadinen, 2005).

IT Staff’s Skills

65. Existence of communication skills 66. Existence of IT management skills 67. Existence of planning skills 68. Existence of technical skill. 69. Existence of ERP experience 70. Existence of controlling skills

(Tadinen, 2005).

Users’ Skills

71. Existence of communication skills 72. Existence of interpersonal skills 73. Existence of planning skills 74. Existence of technical skills 75. Existence of ERP experience 76. Existence of controlling skills

(Tadinen, 2005).

Training and Education

Project Team

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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 63

Table 12. continued Shared Beliefs

Company-Wide Commitment

Project Champion

77. The extent to which employees believe in the benefits of the ERP system

(Amoako-Gyampah & Salam, 2004).

78. The extent to which management team believe in the benefits of the system

(Amoako-Gyampah & Salam, 2004).

79. The extent to which employees and management believe in the benefits of the system is alike

(Amoako-Gyampah & Salam, 2004).

80. The extent to which project gets support all functional segments of the organization

(Law & Ngai, 2007; Somers & Nelson, 2001, 2004; Yusuf et al., 2004; Z. Zhang et al., 2005).

81. The extent to which organizational overall goals are preferred to individual segments goals

(Yusuf et al., 2004; Zhang et al., 2005).

82. The extent to which personnel involvement and participation in the project are assured

(Mandal & Gunasekaran, 2002; Yusuf et al., 2004).

83. Existence of the proper project champion in the organization

(Bancroft, 1996; Legare, 2002; Nah et al., 2001; Nah et al., 2003; Sumner, 1999).

84. Existence of the business, technical, personal, and managerial competencies of the project champion

(Kræmmergaard & Rose, 2002; Somers & Nelson, 2001).

85. Existence of a project champion with high official level in the organization

(Falkowski, Pedigo, Smith, & Swanson, 1998; Sumner, 1999).

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