CSF of ERP Implementations in Sri Lankan Companies

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Critical Success Factors (CSF) of Enterprise
Resource Planning (ERP) Implementations in Sri
Lankan Companies
Chamil B. Hathurusinghe
(139044216)
Subject Area: Management of Information Systems
Supervisor: Dr. Colin Price
Submitted: 14 November 2016
Word count: 16050
Dissertation submitted to the University of Leicester in partial fulfilment of the requirements of the degree of
Master of Business Administration

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TABLE OF CONTENTS
List of Tables ..................................................................................................................................................... iv
List of Figures..................................................................................................................................................... v
Abstract..............................................................................................................................................................vii
Chapter 1 – Introduction..................................................................................................................................... 1
1.1 Research background ................................................................................................................................ 1
1.2 Scope of the Study .................................................................................................................................... 1
1.2.1. Empirical Scope ................................................................................................................................ 1
1.2.2 Theoretical Scope............................................................................................................................... 1
1.3 Key Objectives.......................................................................................................................................... 2
1.4 Significance of the study........................................................................................................................... 2
Chapter 2 - Literature Review ............................................................................................................................ 4
2.1 Introduction............................................................................................................................................... 4
2.2 What is ERP.............................................................................................................................................. 4
2.3 Why do we need ERP?.............................................................................................................................. 6
2.4 Constraints and drawbacks of Implementing ERP ................................................................................... 8
2.5 ERP in Sri Lanka..................................................................................................................................... 10
2.6 ERP Implementation process.................................................................................................................. 12
2.6.1 Implementation success definition and measurement ...................................................................... 12
2.7 Critical Success factors framework......................................................................................................... 15
2.8.1 Cultural Factors ................................................................................................................................ 17
2.8.2 Strategic Factors............................................................................................................................... 20
2.8.3 Tactical Factors ................................................................................................................................ 22
2.9 Conclusion .............................................................................................................................................. 24
Chapter 3 – Methodology ................................................................................................................................. 26
3.1 Introduction............................................................................................................................................. 26
3.2 Research Definition................................................................................................................................. 26
3.1.1 Variables........................................................................................................................................... 27
3.1.2 Research Objectives Validation Criteria .......................................................................................... 27
3.2 Research Philosophy............................................................................................................................... 28
3.3 Research Approach ................................................................................................................................. 28

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3.4 Research Strategy.................................................................................................................................... 28
3.5 Data ......................................................................................................................................................... 29
3.5.1 Population and Sample..................................................................................................................... 29
3.5.2 Questionnaire.................................................................................................................................... 30
3.5.3 Data Collection................................................................................................................................. 30
3.5.4. Strengths and Limitations................................................................................................................ 31
3.5.5 Data Analysis ................................................................................................................................... 32
3.6 Conclusion .............................................................................................................................................. 32
Chapter 4 – Data Analysis ................................................................................................................................ 33
4.1 Collection of data.................................................................................................................................... 33
4.2 Descriptive Statistics............................................................................................................................... 33
4.3 Descriptive analysis of critical success factors in ERP implementations............................................... 36
4.4 Correlation Analysis ............................................................................................................................... 40
4.4.1 Analysis of individual factors........................................................................................................... 40
4.4.2 Analysis of grouped factors.............................................................................................................. 44
Chapter 5 – Discussion and Conclusions.......................................................................................................... 46
5.1 Findings and Discussion .................................................................................................................... 46
5.2 Theoretical Implications .................................................................................................................... 48
5.3 Practical Implications......................................................................................................................... 48
5.4 Limitations ......................................................................................................................................... 48
5.4.1 Directions for future research........................................................................................................... 49
5.5 Reflections .............................................................................................................................................. 49
References......................................................................................................................................................... 51
Appendix........................................................................................................................................................... 56

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LIST OF TABLES
Table 1 Summary of literature: Factors to discriminate success of ERP implementation ........... 16
Table 2 Summary of literature: Factors to discriminate success of ERP implementation ........... 17
Table 3 Composition of New to ERP respondents ....................................................................... 34
Table 4 ERP software Vs Respondents' level of involvement ..................................................... 34
Table 5 Ranking of CSFs using measures of central tendency .................................................... 37
Table 6 CSF rank based on frequency.......................................................................................... 37
Table 7 Summery of ranks - CSF ................................................................................................. 39
Table 8 Summary of ranks - grouped CSF ................................................................................... 39
Table 9 Correlations between the CSFs........................................................................................ 41
Table 10 Regression Model summary: All CSFs ......................................................................... 43
Table 11 ANOVA : ALL CSFs .................................................................................................... 43
Table 12 Coefficients Table: All CSFs......................................................................................... 43
Table 13 Correlation table: Grouped CSFs .................................................................................. 44
Table 14 Model Summary: Grouped CSFs .................................................................................. 45
Table 15 Regression model: Grouped CSFs................................................................................. 45

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LIST OF FIGURES
Figure 1: Business Functions within ERP Systems (O'Brien 2004)............................................... 6
Figure 2: Criterion for evaluating the effectiveness of the implementation................................. 14
Figure 3 Conceptual frame work .................................................................................................. 26
Figure 4 Composition of Respondents based on Knowledge in ERP .......................................... 33
Figure 5 Ranks of CSFs based on software used.......................................................................... 38
Figure 6: Experience in ERP vs Ranks of CSFs........................................................................... 38

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ACKNOWLEDGEMENTS
I would like to express my gratitude to my supervisor, Dr. Price for his guidance, advice and great kindness
shown to me throughout this research. This research would not have been possible without his pleasing
support.
I am extremely grateful and thankful to my superiors and colleagues in office for their guidance and support
given throughout my studies with University of Leicester and during the research phase. I owe my deepest
gratitude to my loving parents and my dearest sister for all the inspiration they have given me throughout my
life. Above all I am thankful to my parents for assisting me in accomplish my dreams of pursuing my higher
studies and giving me a better opportunity to have better future.
I would also like to thank all my lecturers and the management of BMS for the support and contribution of
their valuable knowledge to complete my MBA successfully. Last but not least I would like to thank all of
my friends for the support and encouragement given throughout my life. It’s a pleasure to thank who made
this possible.
Chamil Hathurusinghe
November 2016

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ABSTRACT
ERP is gaining popularity in South Asian countries even though the implementations are considered to be
complex and there are many cases where the implementations have failed. Therefore, further research and
evaluation of the CSFs of ERP implementations would be useful for the industry. This research analyses the
past academics on CSFs in ERP implementations and have identified 12 factors for further evaluation in Sri
Lankan business context. The sample for this study consists of 15 managers or executives involved in ERP
implementations in Sri Lanka.10 companies who had implemented full ERPs within last 10 years were
identified for the survey. Out of the 150 participants 84 complete responses were taken for the analysis and
deriving conclusions.
CSFs were ranked using descriptive statistics consisting mean, median, mode, sum and the frequency of each
rank. However, there were no major variation in ranking depending on the measure. Moreover, the 12 CSFs
identified were grouped into tactical, strategic and cultural factors and their impact on the success of
implementation were analyzed. Spearman correlation was calculated to identify the factors significantly
related to the successes and to identify inter-correlations between CSFs. In addition, a regression model was
fit to predict the success of implementation with the grouped CSFs.
It was revealed that most of the factors are interrelated and success is not merely driven by one or two factors
but each factor contributes directly or indirectly. Nevertheless, top management support was prominent as a
significant CSF. When grouped factors are considered, strategic factors were highlighted over cultural and
tactical factors. Tactical factors were identified as least significant for the success of implementation.

CHAPTER 1 – INTRODUCTION
1.1 Research background
In the turbulent business environment, the companies should adapt to changes fast in order to survive and
succeed. Business environment is influenced with diverse factors, hence involvement of technology is
essential for summarizing and presenting information on timely manner (Robert, 2011). ERP (Enterprise
Resource Planning) plays a vital role in providing accurate information on business operation. Even though
the concept of ERP is not the latest, it is currently getting popular in developing countries in South East Asia
(Scobbo, 2014). Today most of growing business organizations are adopting ERP to ensure the smooth
functioning of all activities and to facilitate its growth plan.
As the ERP involves integrating all business units of the organization, implementing a new ERP will not be
straight forward. Increasing trend in use of technology to facilitate the business strategies and complexity of
adopting the same, demands the knowledge in CSFs of ERP implementation (Leimeister & Huber, 2009). In
addition, published academic reports with reference to ERP implementations in Sri Lanka or South East Asia
are less compared to Western and Middle Eastern regions. Hence CSFs with the experiences in
implementations in Sri Lanka will be more useful for the current context (Dharmarathne, 2004). This
research will take the findings from published researches and explore the applicability to Sri Lanka.
1.2 Scope of the Study
1.2.1. Empirical Scope
The CSFs were identified by reviewing past academic published data and they were grouped as tactical,
cultural and strategic factors (table 2). The author has ranked CSF in Sri Lankan context by surveying the
opinion of different stakeholders in past ERP implementations.
1.2.2 Theoretical Scope
This research would review theories and models relating to ERP implementation, project management and
CSF frame work with the aim of finding conceptual relationship between the identified CSFs and success of
ERP implementation. Also this research will validate the correlation of each CSF with the success of
implementation statistically and derive the significance of each CSFs.

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1.3 Key Objectives
The aim of this research is to identify, validate and rank the CSFs for ERP implementations in Sri Lanka. The
research focuses on 10 ERP implementations and will collect the opinion from 15 stakeholders of each
implementation. The objectives of the study: -
1.3.1. To critically evaluate the relevant literature on ERP, how it evolved over time and CSF of ERP
implementations. The reasons for failure or success of the implemented system and contribution
of each factor to make it success or failure have to be concerned in here.
1.3.2. To identify common CSF in ERP implementation and ranking CSFs based on their significance in
making the implementation successful.
1.3.3. To identify the relationship between CSFs and the success of the implementation.
1.3.4. To categorize the CSFs as tactical, strategic and cultural factors and identify the significance of
each category in successful implementation.
1.3.5. To provide a statistical model to predict the success of the implementation based on the CSFs
based on the experience of ERP implementations in Sri Lanka in last 10 years.
1.3.6. Provide a list of key factors to focus in order to increase the probability of successful
implementation.
1.4 Significance of the study
The concept of ERP is currently becoming popular amongst Sri Lankan companies. The complexity and non-
familiarity of ERPs have delayed Sri Lankan companies adopting ERPs but currently ERP is getting popular
as a tool to facilitate growth and reduce cost (Gunawardena & Wickramasinghe, 2010). This research will
encapsulate findings from other literature and also presents the survey results from local implementation
experiences. Hence this study will be useful for all organizations who is pursuing to embark on ERP
implementations as a guideline to set the background to ensure success.

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In addition, this research can be used as the base for academics who will further study in CSFs, ERP and
project management. This can be further expanded to other countries in south Asian region to identify any
similarities in CSFs. The survey sample consists more manufacturing companies hence it will be interesting
to gather experiences from diverse industries. Nevertheless, previous studies have identified that the success
of implementation is not dependent on the industry (Garg and Garg, 2014, Stanciu and Tinca, 2013).
Furthermore, success of ERP depends on diverse factors and many could be specific to the implementations
as well hence this research has been based on the factors identified through existing literature.

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CHAPTER 2 - LITERATURE REVIEW
2.1 Introduction
This chapter focuses in providing an overview of ERP, then summarizing a definition for ERP. The theories
involved in project management, identifying CSFs and research methods will also be discussed in this
chapter. Further, this chapter deliberates the current status of ERP in Sri Lanka. Then process of ERP
implementation and how to measure the success of the implementation will be established based on the past
studies.
The main emphasis of this chapter is to identify the common CSFs to be evaluated. The factors will be
identified based on past researches. The factors which are related specifically to ERP implementations will
be considered and common factors related to any project implementations are excluded. Finally, identified
CSFs will be critically analyzed on their impact to the success as illustrated by previous studies and grouped
as tactical, strategic and cultural factors.
2.2 What is ERP
Schniederjans and Yadav (2013) have defined a business organization as a combination of multiple teams
working towards a common goal. In order to satisfy organization’s customers while earning profits, effective
and efficient integration of different teams will be essential (Tsaih, et al., 2015). Madurapperuma et al
(2007), Akkermans and Helden (2002), Garg and Garg (2014) and Naderinejad, et al. (2014) have identified
ERP system as a tool to facilitate the integration between different departments. Further, they have
highlighted the importance of understanding the concept of ERP in multiple perspectives since it is integrated
and related to whole organization. From management perspective ERP is a tool to improve resource
planning, management and operational control. Organizational integration’s perspective it is set of modules
which integrate activities across departments from customer order entry, product planning, warehouse
management, procurement and product dispatching (Lin and Ma, 2014). Chung (2007) has identified ERP as
a tool to standardize organizational processes and to adopt best practices. Therefore, it is apparent that if the
ERP is implemented successfully there will be a remarkable payback. Considering the above literature
definition of ERP can be encapsulated as a system to unify all departments together in single software on a
single database which facilitates faster and accurate information flow across the organization. A similar
definition is given by Wickramasinghe and Karunasekara (2010), Leimeister and Huber, (2009) and
Naderinejad, et al. (2014). However, the definition of ERP will not be limited to above as the scope of ERP

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cannot be established clearly and the technology is developing rapidly (Peng & Gala, 2014). Therefore, how
ERP was evolved is explored to understand the concept of ERP.
ERP is evolved from material requirement planning (MRP 1). In early stage MRP 1 was considering only
inventory control for uninterrupted production. Later, MRP 1 was developed to Manufacturing resource
planning (MRP 2) to accommodate the changes in the production schedule based on the feedback from
current production and purchase conditions (Wickramasinghe, Karunasekara, 2010, Basoglu , et al., 2007).
Then ERP was developed by making the system more robust and dynamic with considering all functions of
the organization. Currently available off the shelf ERPs are SAP, Oracle, PeopleSoft, Baan, Dynamix, Sage,
Lawson, etc. These are developed module wise by considering the industry best practices. Different modules
will be available specific to each industry. Hence selecting the required modules would be a complex and
critical process as the software which will fit best to the organization need to be picked (Perera & Costa,
2008; Cooray, 2004). Mainly if the best suitable software solution is not selected then during the
implementation, lot of customizations must be incorporated to the off the shelf software and the ERP will not
give the expected benefits (Hawari & Heeks, 2010). The selection criteria of the package will not be
discussed as it will be broader subject and the objective of this study is focused on CSFs of the
implementation phase.
As per Keller (1994) current ERPs will have following technological characteristics.
- Integration of a relational data base
- Multiple interfaces
- Open to different hardware platforms
- Client-server architecture
- Focus on supply chain
- Connectivity to internet and intranet
Therefore, ERP would require sophisticated information communication technology (ICT) infrastructure and
highly competent ICT team to maintain and facilitate the smooth operation after implementation (Lin and
Ma, 2014). Latest trend of the ERPs is to move on to cloud software in order to reduce burden of
maintaining sophisticated ICT infrastructure for organizations which needs to implement ERPs (Peng and
Gala, 2014). Also the cloud technology will increase the accessibility of the system. In other words, it will
not be necessary to come to office to use the ERP or to retrieve information from the system.

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However, ERP is also seen as a tool which complicates the business process as it increases data entry to
operational staff. Similarly system controls will set the processes to follow which will reduce the flexibility
compared to manual processes (Hedman, 2010). Further, there would not be any immediate benefit realized
for operational team who would use the system for transactional purposes (Cereolaa, et al., 2012). Therefore,
ERP is considered as a complex tool which would reduce the flexibility of business processes in traditional
business environment. Upton and McAfee (2000) have illustrated how ERPs contribute in producing
corporate information and making management decisions. Januschkowetz (2001) and O’Brien (2004) have
illustrated the interrelation of the system as per the below figure which results different uses of ERP to
different stakeholders of the organization. Hence why ERP is required for an organization should be
evaluated.
Figure 1: Business Functions within ERP systems (O'Brien 2004)
2.3 Why do we need ERP?
The definition and evolution of ERP illustrates that it is versatile software which seamlessly integrates all
departments of an organization. ERP reduces time in performing operational activities and the system
controls will ensure the accuracy of the process which enhances the efficiency and effectiveness of the
operations (Leimeister and Huber, 2009; Robert, 2011). This will result in reduction in costs and facilitate
expansion of business which is generally considered as the main purpose of ERP (T.S. Madurapperuma, et

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al., 2009; Grunert, 1992; Cereolaa, et al., 2012). The main reasons why companies implement ERP system
could be due to below reasons
1. To use single system across the organization
Organization is a combination of different activities and mostly different systems are used for manufacturing,
inventory and purchasing and accounting and financial activities. Hence maintenance of multiple systems
will be difficult and costly (Basoglu , et al., 2007). Further the systems will not be connected seamlessly.
Also there could be inaccurate data due to more manual interference in integration (Ahmad & Cuenca, 2013).
In addition, there will be a delay in reporting on organization operations since management information need
to be provided after considering multiple systems (Perera & Costa, 2008). Therefore, the organizations would
invest in an ERP system to avoid the above limitations of having multiple systems for different activities.
2. Avoid duplication of work
Due to the disintegration of different modules there will be duplication of data entry in each module (Ahmad
& Cuenca, 2013). For example, a material receipt entered in inventory module should be entered in finance
module for the payment and updating the general ledger. Perera and Costa (2008) have highlighted that there
will be inefficiency build up in the business processes and delay in providing management information due to
the duplication of data entry. They have suggested ERP systems to avoid above limitations.
3. Faster information
ERP will enable more data to be captured and then system reports to be developed. Consequently generation
of management information would be only a click of button. Further, there are business intelligence (BI)
tools which can be easily integrated with ERP system hence real time information will be provided via
dashboards to the management (Leimeister & Huber, 2009). This will enable the management to monitor the
operations of the organization and act fast if there is any crisis. In addition, currently ERPs are web based
and can be easily accessed without being in office which ensures real-time information availability (Peng &
Gala, 2014).
4. Efficient work in capital management
Since all the modules are integrated information related to purchasing, inventory, sales and debtors can be
monitored from single screen. Further, the bank or cash balances also will be maintained in the system. The
system will facilitate to identify long outstanding debtors, slow moving inventory items, aged inventory
items and also any over drawn bank balance (Scobbo, 2014). In addition, new ERPs can be set up to send the
dunning letters to the debtors automatically from the system which will automate sending the reminders and

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flowing up the debtors. Moreover, there are payment programs in built to ERPs which ensures only the
payments which are due gets paid hence it enables to use the full credit period given (Ahmad & Cuenca,
2013).
5. Standardize business processes
Lin and Ma (2014) have explaind how business processes will be driven by the system once ERP is
implemented. Hence the business process should be re-engineered based on the system which reorganizes the
perception of processes at strategic, managerial and operational levels of the organization (Ke and Wei, n.d.;
Lin and Ma, 2014). Further, the ERP will enable tight integration of all departments to achieve goal
congruence within the organization.
Above can be summarized as ERP is implemented to achieve cost effectiveness, improvement in efficiency
and better customer satisfaction. Further, an upgrade of technology is required because the technology is
developing rapidly and the capability of legacy systems will be limited (Peng & Gala, 2014). To support
organization’s growth and to stay competitive globally, a suitable new technology need to be adopted
(Grunert, 1992; Akkermans & Helden, 2002). Moreover, with the agile integration facilitated with new ERP
is expected to maintain the goal congruence within the organization (Krotov, et al., 2011). However, similar
to the above benefits ERP systems do have limitations.
2.4 Constraints and drawbacks of Implementing ERP
In order to use ERP effectively, the limitations of ERP need to be identified and managed. If not the above
discussed benefits will not be realized (Krotov, et al., 2011). The key limitations of adopting an ERP would
be as follows.
1. Costly
A cost of full scale ERP implementation in a large organization could easily exceed $100 million and the
implementation process will take at least 2 years (Chung, 2007). In Asian region, cost could not be high as
$100 million but it will be around $7 million including all the related costs such as license fee, hardware
upgrades, implementation fees, training cost, etc (Ahmad, et al., 2012). Further, significant time of the senior
management and the staff will have to be invested in implementing the system which disrupts the routine
operations, productivity losses and incur costs (Cereolaa, et al., 2012). Hence many organizations cannot
afford to invest on ERPs in full and with the partial investment allocation the implementation becomes less
effective.

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2. Difficulty in maintenance
In addition to the implementation, a maintenance contracts need to be signed with the software provider and
also with the implementation partner to maintain the system. These contracts will incur in general 20% of the
cost of the implementation which is a significant addition to the operating cost of the company (Grunert,
1992, Fang and Patrecia, 2005). Likewise, an ERP to operate smoothly after implementation hardware
support, accuracy of master data and updating the system on time with the transaction data will be essential.
As the system is new to the internal staff, they would not have required skills to maintain or troubleshoot the
new ERP hence maintenance of the system will be difficult. Inability to maintain the system properly with
correct master and transaction data will lead to frustration among users and management as the expected
benefits are not realized. (Krotov, et al., 2011).
3. Complexity in implementation
Since ERP need to integrate all departments and operations of a company, implementing an ERP will not be
straight forward. If the organization has already adopted a system, then updating to a new system will be
easier as the processes are established (Lin & Ma, 2014). But if the organization is moving from manual
process to a new ERP it will be a dramatic shift of routine processes which needs to be carefully designed.
Besides the systems are developed for general practices of the industry and region but will not match to
organizations’ process perfectly (Tsaih, et al., 2015). Therefore, company specific alterations to the system
should be adopted during the implementation. In addition, company processes should be changed to fit to the
system selected. Based on above it is apparent that adopting a new system will be complex with the unique
scenarios specific to organizations and managing the change within the staff.
4. Resistance to change
With the new system, the staff needs to be trained and made aware of the changes to the business processes.
However, training will be difficult since staff will be more focused on routine operations and there will be
less focus on the new system before implementation (Robert, 2011). Besides the staff will not be free to learn
the new system. As per Cereolaa, et al. (2012), since a different team is working on the implementation, rest
of the organization would not own the new solution and they will identify limitations of the new processes.
Acceptance of the system and support from the staff to address the initial unexpected bugs in the system will
be essential to settle the system (Chung, 2007). Therefore, an effective change management program should
be executed with the intention of introducing and settling the system among users (Bierstaker, et al., 2014).

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5. Inflexibility
With the system implementation, business processes will be streamlined and processes will be defined.
Hence the flexibility had in manual process which was based on personal competencies will be limited and
the process will be common for all (Ram, et al., 2015). Therefore, the processes will be controlled and
streamlined via the ERP. This can be identified as a limitation by the operational staff. For example, in
releasing a payment system approvals and completing all system checks (matching the invoice with Purchase
order and good receipt note) need to be followed hence urgent payments cannot be entertained without
following the system process.
6. High dependency over the system
As per Lin and Ma (2014), once a system is implemented all the business processes will be settled around the
ERP. All the operations will be captured in the system through a key stroke or an automated interface. Hence
the business will not be able to continue without updating the system. For example, in a manufacturing
organization an item cannot be invoiced if the production processes are not completed in the system even
though physically production is completed. Therefore, the organization will be highly dependent on the
system and it needs to be maintained well to avoid unforeseen system shutdowns (Cereolaa, et al., 2012).
Correspondingly the support team should be capable of restoring the system promptly in a crisis. The
company need to implement necessary plans to manage the system risk.
However, organizations invest on ERPs since it is a key tool which enables the growth of business and fast
decision making with key information. Also the disadvantages of ERP can be managed with correct
implementation process and allocating required resources (Krotov, et al., 2011, Stefanou, 2001). In addition,
ERP enables organizations to adapt to the changes in technology and external environment so as to get the
benefits of latest developments. Implementation of an ERP would assist the organization to reengineer the
business process as per industry best practices. Therefore, ERP is gaining popularity in Sri Lanka as a tool to
be adopted if the organization needs to stay competitive globally (Dharmarathne, 2004,Wickramasinghe and
Karunasekara, 2012).
2.5 ERP in Sri Lanka
Popularity of ERPs would differ based on the geographical regions (Randeree et al., 2012). As per the
findings, concept of ERP is more popular in developed countries because ERP needs complex information
technology infrastructure and skilled staff. Further, ERP is more required in manufacturing industry due to
complex nature of the operation compared to service sector. Capability maturity model (Paulk, 1994) also

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provides a similar view on the popularity of the ERP and the theory suggests that ERP would be successful
when the organization has greater knowledge and innovation which are available in companies in developed
countries. However, the expansion of such companies to other parts of the world dispersed the technology
and the knowledge to other countries. Hence it can be argued that the popularity of the practices such as ERP
are not based on the development of the country but based on the availability of the resources which can
attract the multinational companies. For instance, many multinational manufacturing companies moved to
South East Asian countries as the cost of labor was cheaper. Then the ERPs were implemented for smooth
retrieval of information for the management purpose.
Sri Lankan context of ERP practices are much similar to the developing countries in Asian Region. The
adoption rate of ERPs and latest technologies are relatively low in this region (Ahmad, et al., 2012).
However, cheaper labor and other resources in the region have attracted multinational giants and they
introduced new technologies. Sri Lankan companies like Holcim Lanka Ltd, Chevron Lubricants Lanka Ltd,
Lanka IOC PLC, Associated Motor Ways Pvt Ltd and Loadstar Pvt Ltd are examples for adopting ERPs as
their parent companies use the same. In addition to the subsidiaries of multinationals, companies like John
Keels Holdings PLC, MAS Holdings Pvt Ltd, Hemas Holdings PLC, Asian Paints Ltd, Dialog Axiata PLC,
Brandix Lanka Pvt Ltd and Aitken Spence PLC which are companies originated from Sri Lanka have
adopted ERPs (Gunawardena & Wickramasinghe, 2010). During the past two decades, information
technology (IT) service sector has mature in Sri Lanka and there are global IT companies like IFS, Virtusa
and Millenium IT based in Sri Lanka. Further, multinational IT companies like IBM, Oracle, PWC and
Accenture have established their subsidiaries in Sri Lanka thus the concept of ERP is becoming popular
within the country and region. In addition, currently the ERP software providers like Oracle, SAP, Dynamix,
etc have made bundle offers which are affordable for medium size companies and the implementation can be
completed in stages hence the investment can be made in staggered basis or once the benefits are realized
from the first stage the second phase can be started. This flexibility in implementation has made ERPs more
popular in this region (Perera & Costa, 2008).
Further, the infrastructure requirements can be outsourced and there are companies who have specialized
providing managed support services where there will not be any burden to the customer. Therefore,
embracing new technology and implementing new ERPs have become simplified and less challenging to the
traditional companies (Dharmarathne, 2004). This is one factor enabled many companies to consider
implementing new ERPs apart from the cost factor. In addition, ERP is identified as a proven tool to
streamline and standardize the business processes (Cooray, 2004). Thus companies in developing countries

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implement ERPs to reap the benefits of process improvements and to adopt best practices (Ahmad, et al.,
2012). Due to the above facts, ERPs are becoming popular in the region and also in Sri Lanka.
Currently many medium and large companies in Sri Lanka and South East Asia region considering
implementing ERPs or already have implemented ERPs. Manufacturing, telecommunication, apparel,
insurance, trading, FMCG, healthcare, printing and financial services industries have already implemented
ERPs in Sri Lanka during the last 15 years and majority of the implementations are from manufacturing
sector (Gunawardena & Wickramasinghe, 2010). Therefore, this research sample includes more
implementations in the manufacturing sector. However, Ram et al (2013) have concluded that factors
affecting the implementation success are common across industries and findings could be used across
industries as first-hand information.
2.6 ERP Implementation process
An ERP implementation is considered as a project and usual project management techniques are used to
manage the project while delivering the objectives. So that, the basic methods used to drive the
implementations cannot vary with the industry or the software (Grunert, 1992). However, each software
provider has published an implementation guide line which are differently termed but the essence of all
guidelines is same. Hong and Kim (2002) have referred new technology implementations as re-invention of
the technology and simultaneous adaption of the organizations. Further, they have given key steps of IT
implementations as development and maintenance, organizational procedures to be revised and
organization’s staff to be trained and educated. In contrast, importance of the given steps could be different
based on the nature of the organization but similar steps would be needed to complete the project
successfully (Lin & Ma, 2014). Since this research focuses on CSFs of implementation, it is imperative to
establish the criteria to recognize the success of implementation.
2.6.1 Implementation success definition and measurement
As discussed above implementation methods are well established by ERP vendors, implementing partners
and many authors. It was identified that key steps of implementations are common for all industries,
countries and software packages. Similarly the definition of success of an implementation cannot be different
by industry, country or software (Dharmarathne, 2004). Thus definition of success is deliberated using
available literature even though they are mostly based on implementations in developed countries.
Madurapperuma et al., (2009) has broadly stated that the success of a new ERP implementation is dependent
on the effective usage of the system. The effective usage of the system covers realization of the expected

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benefits from the ERP. However, benefit realization will not only depend on successful implementation of
the project but also many other factors like company culture, level of technology literacy of staff, etc
(Wickramasinghe & Karunasekara, 2012). In contrast, it is also argued that the implementation scope will not
be limited to successful adoption of the system but also it is required to change in whole organization as
required for the system (Rabaai, 2009).
Annamalai and Ramayah (2012) have produced similar criteria to measure the success considering
achievement of objectives such as lead time in retrieving information, reduction in working capital, reduction
in transportation and logistics costs due to advanced operational planning, increase in productivity and
increase in customer satisfaction. These parameters to be measured before the implementation and compare
with the after implementation in order to recognize the success of newly implemented ERP. Further, Hong
and Kim (2002) have defined the success of ERP implementation using four metrics: reduced costs, project
completion on time, performance of the system and benefits accrued to the organization due to
implementation. Therefore, benefits expected from the system cannot be ignored when measuring the success
of the implementation. However, the implementation success should incorporate delivery on time, within the
given budget and also the achievement of desired objectives. There can be instances where the
implementation of the project is successful but the benefits to the organization are not realized as expected
due to changes in the business during the implementation phase. Also success in realization of benefits could
be subjective as expectations and the level of understanding could be different (Ram, et al., 2015).
A criterion for evaluating the effectiveness of the implementation from the user’s perspective was presented
by Rittammanart, Wongyuedy and Dailey (2003). They have defined the evaluation criteria dividing based
on four main areas as illustrated in below diagram.

14
Under technology complexity, Rittammanart et all (2003) have considered the complexity of implementation,
level of effort and skills required in system maintenance, available system security, management of user
access and user friendliness. In resource utilization, system’s ability to improve efficiency and effectiveness
in utilizing resources is considered. How accurately and fast the information is dispersed throughout the
organization to support decision making is another criterion set to evaluate the success of implementation
(Gunawardena & Wickramasinghe, 2010). Fourth criteria is how easy to implement new business processes
in the system. This is essential due to current businesses are dynamic and organizations adopt changes to gain
competitive advantage then the system should not be a limitation (Naderinejad, et al., 2014).
Another way of identifying the success of an implementations would be understanding whether the project is
not a failure. Therefore, it will be vital to define how to categorize a project as failed. Zhang et al (2005) has
stated a project is considered as failed if the implementation is delayed, going over budget and need
additional funding. A similar thought is published by Hong and Kim (2002) as an implementation deemed to
be failed if it was not completed within budgeted cost and time. An implementation can be considered as
failed if the data confidentiality was breached (Goel, et al., 2011; Akkermans & Helden, 2002). Further, if the
implementation increases server downtime and leads to system failure then the implementation can be
considered as failed. In conclusion implementation failure or success can be identified based on the following
parameters.
1. Completion on time
2. Completion within expected cost
3. Achievement of objectives
4. Resulting loss of business
ERP System
Technology
Complexity
Resource
Utilization
Information
Dissemination
Business Logic
Implementation
Figure 2: Criterion for evaluating the effectiveness of the implementation

15
Parameters one and two will determine the project governance based on the project plan. However, there can
be errors in planning stage which could result in not achievement of expected time frame and cost. Hence in
deciding the failure or success these two parameters will be given low weight (Lin & Ma, 2014). Ram, et al.
(2015) have illustrated that even without completing the implementation on time and within the budget if the
project delivers the set objectives, implementation could be considered as successful. Therefore, achievement
of objectives would be an essential parameter in determining the success of implementation. Nevertheless, it
will be subjective and not all employees will realize the achievement of objectives (Samaratunga, 2003). The
last parameter would be a measurable value by comparing before and after results of the company. In
addition, it can be measured if there were any interruption to organization’s operation in satisfying customer
orders. Also customer complaints can be used to evaluate if the new system has impacted adversely to
customers.
Further, the below table illustrates the factors to recognize the success of ERP implementation as identified in
other literature. Most of the studies have measured the success of implementation using 2 - 4 factors.
Gunawardena and Wickramasinghe (2010) have concluded that if the ERP performance is considered as
good then the implementation is successful. Therefore, considering the above findings, success of ERP
implementation can be identified by the achievement of objectives or based on the acceptance of the system
by other stakeholders.
However, implementing an ERP system is not easy and many implementations have failed. Kozak-Holland
(2007) has identified that only 25% is the success rate, the failure rate is also around 25% and 50% of the
implementations are with partial success and failure. A survey of Umble and Umble (2002) have revealed
that 65% of senior executives believe that ERP implementations have moderate chance of damaging their
business. Therefore it is important to identify the key factors which drive the implementation to the success.
2.7 Critical Success factors framework
Critical success factors (CSF) are mostly defined against the success of business operations. CSF are
operational goals which represent the success of business as per the industry best practices (Garg & Agarwal,
2014; Rockhart & Scott, 1984). Laudon and Laudon (1998) have determined CSF as a small number of easily
identifiable operational goals shaped by the industry, the firm, the manager and the environment that assures
the success of an organization. Another similar thought was presented by Hossain and Shakir (2001) and they
termed CSFs are used to identify and state the key elements required for the success of a business operation.
This research intends to apply the CSFs frame work for ERP implementations in Sri Lanka.

16
Table 1 Summary of literature: Factors to discriminate success of ERP implementation (Gunawardena &
Wickramasinghe, 2010)
Rockhart (1982) has declared that successful adoption of CSF framework will depend on the subjective
ability, style and perspective of the executives. Further, he has explained four perceptions that need to be
considered when developing the CSF framework. The perceptions are industry, operational strategies,
managers’ perception and changes in the environment. In developing the CSF framework for ERP
implementation, operational strategies perception is considered because ERP implementation require sound
knowledge of business practices and implementation process is more operational (Seddon and Shang, 2002).
Therefore data need to be collected covering all stakeholders.
2.8 Critical Success Factors
This paper attempts to identify CSF empirically and rank the factors that conduce to success of the
implementation in Sri Lanka through a survey. Available literature on critical success factors can be
summarized as per table 2. Most of the literature on ERP implementations are case studies which cannot be
generalized but lessons can be learned from the implementation experiences illustrated in case studies
(Arnold, 2006; Avison and Malaurent, 2007; Davison, 2002; Sheu et al.,2004; Soh et al. 2000).

17
Out of the factors in table 2, the factors which are considered by most of the academics are used for this
research. The factors are categorized to represent three key aspects affecting the implementation success as
cultural, tactical and strategic (Kuang et al., 2001). Most of the authors have categorized as strategic and
tactical factors without highlighting cultural factors. However, in Sri Lanka and south East Asia, culture
plays a major role in organization (Ahmad, et al., 2012; Belassi & Tukel, 1996). Therefore, cultural factors
are separately considered for this research.
2.8.1 Cultural Factors
In Asian countries culture plays a pivotal role in driving change, learning, team work, etc which are key
factors required for a successful implementation (Wickramasinghe, Gunawardena 2010). Since Sri Lanka is
an Asian developing country the cultural factors affect the success of the project which need to be considered
separately. Change management, organization culture and composition of the core team are grouped as CSFs
represent the culture (Rabaai, 2009). However it is argued that cultural factors are not uniquely related to
ERP implementations but in general cultural factors are impacting all operations of the organization. Hence
the cultural factors need not to be considered as CSF (Lu, et al., 2008). In addition, culture is a broader area
which cannot be represented with few factors but it need to be studied as a separate subject. Nevertheless,
culture of an organization is imperative factor in achieving any objective successfully
Therefore, it cannot be ignored in identifying the CSFs of ERP implementations (Yingjie, 2005). Hence
Change Management, composition of the core team and Organization culture are considered to represent
culture.
2.8.1.1 Change Management
Grabski, Leech, and Lu (2000) have identified that user resistance has been with any type of system change
and the resistance will be more for a complex tool like ERP. The resistance is mainly due to the fear of losing
the job with the improvements in the system or due to the disturbance to their routine work life (Rabaai,
2009, Bierstaker, et al., 2014). Hence the process changes will be highlighted as reasons for reduction in
efficiency. Further, Ahmad and Cuenca (2013) have mentioned that the integration of ERP which will drive
the organization in the same phase will require all employees to perform their duties on time if not there will
be disturbances for the organization’s operations and it will be highlighted.

18
.
This transparency in work and loss of freedom are other reasons which increases the resistance. But if the
organization culture is open for change and embracing process improvements there will not be any resistance
for change. Therefore, change management is directly linked with organization culture, the importance of
change management in implementing an ERP is determined by prevailing organization culture (Hedman,
2010). Hence Change Management is considered as a CSF representing Culture in this study.
ValueChain
Connectivity
Interdepartmental
corporation
Managinguser
expectations
Businessplanand
vision
Projectchampion
Effective
communication
Software
PostImplementation
Support
Projectteam
composition
Monitoringand
evaluationof
performance
Implementation
Partner
ProjectPlanning
Changemanagement
OrganizationCulture
Previousexposureto
ERP
Usertraining
Projectmanagement
Topmanagement
support
Al-Mashari,etal.(2003)xxxxxxx
Bajwa,etal.(2004)xxxxxxxx
Bingi,etal.(1999)xxxxxxx
Buckhout,etal.(1999)xxxxxx
Dembla,(1999)xxxxxxx
Duchessi,etal.(1989)xxxxxxxx
Ehie&Madsen(2005)xxxxxxxxx
Ehieand,Madsen(2005)xxxxxx
Falkowski,etal.(1998)xxxxxxxx
Finney,&Corbett(2007)xxxxxxxxxxx
Gargeya,&Brady(2005)xxxxx
HollandandLight(1999)xxxxxxxxxxxxx
Jafari,etal.(2006)xxxxxxxxx
Jarrar,etal.(2000)xxxxx
MandalandGunasekaran(2002)xxxxx
Manthou,etal.(1996)xxxxx
Motwani,etal.(2005)xxxxxxxx
Muscatello,&Chen(2008)xxxxxxxxxxxx
Nah,etal.(2001)xxxxxxxxxxx
Ngai,Law&Wat(2008)xxxxxxx
RobertsandBarrar(1992)xxxxx
Rosario,(2000)xxxxxxxxxxxxx
Sammon,Adam,&Carlsson(2009)xxxxxxx
Sammon,etal.(2009)xxxxxxxxx
Seidel&Back(2009)xxxxxxxx
Somersand,Nelson(2001)xxxxxxxx
Sum,etal.(1997)xxxxxxx
Sumner&Bradley(2009)xxxxxxxxx
Sumner,(1999)xxxxxxxxx
Sun,etal.(2005)xxxxxxxxxxx
Umble,etal.(2003)xxxxxxxxxx
Wee,(2000)xxxxxxxxxxxx
Woo(2007)xxxxxxxxxx
Yokota,(2007)xxxxxxxx
Yusuf,etal.(2004)xxxxxxxx
Zhang,etal.(2003)xxxxxxxxxx
TotalCount13581516171718191920212123232432
CriticalSuccessFactors
Authors
Table2Summaryofliterature:CSFusedbyotherauthors

19
2.8.1.2 ERP Core Team composition
Who is selected as the ERP core team will be another factor identified as a CSF. The team need to be
balanced with mature and young, experienced and new to the company (Ram, et al., 2015). Further there
should be sufficient number of members to handle the work load based on the scope of the project.
Furthermore, the involvement of members between the business and implementation also need to be
considered. Sufficient time should be spent in providing the requirement and finalizing the solution. Next
would be testing and signing off the system configured and finally leading the training would be key
responsibilities of the core team (Cereolaa, et al., 2012). Further, the core team will be change management
agents who will drive the change and manage the resistance for change. Hence the composition of the core
team should not be merely based on technical skills but organization culture need to be considered.
Senarathna and Warren (2014) have highlighted that the core team’s tasks could be more technical, they will
be the agents in settling the system thus the composition of the core team need to be different depending on
prevailing organization culture. As per above, it is apparent that core team plays a pivotal role in
implementation and the team need to be selected carefully to enable the smooth flow of all activities.
Accordingly, composition of the core team is considered as CSF representing cultural factors.
2.8.1.3 Organization Culture
A culture with shared values and common objectives is conductive to success because it emphasizes
continuous improvement and empowers willingness to accept new technology. As explained in above,
requirement of change management and acceptance of the system depend on organization culture but only
those two factors will not be sufficient to represent the impact of culture on an implementation (Senarathna &
Warren, 2014). Therefore, organization culture in general is added as a CSF. This will provide flexibility to
capture importance of organization culture irrespective of change management and composition of the core
team.
As per Basoglu , et al. (2007), human factors are not easy to handle compared to technical problems hence
the cultural factors set an unneglectable effect on the success of ERP implementation. Significance of culture
can be well explained when two similar companies implement the same ERP but results are different.
Change management and ERP exposure of the organization are considered to be more tactical factors than
cultural factors in some academic journals but as explained in above they are taken as more relevant to
culture when ERP implementation success is considered (Ke & Wei, 2008).

20
2.8.2 Strategic Factors
Holland and Light (1999), Pinto and Slevin (1987) and many other academics have considered strategic and
tactical headings to differentiate the CSFs. Strategic issues to specify the direction of the company and
synchronization of the technology adopted with organization vision. CSFs such as selection of Training,
selection of the ERP implementation partner, level of top management involvement and Project management
are aligning the support expected from technology with business strategy. How the above factors play a vital
role in success of ERP implementation will be illustrated below.
2.8.2.1 Implementation Partner
After the software is purchased, implementation partner plays a pivotal role in establishing the system to
achieve organization’s objectives. The consultants engaged in software selection need not to be the
implementers (Peng & Gala, 2014). Implementations usually spread across a year or longer, then post
implementation support will be critical to settle the system hence the implementation partner should be
strong enough to provide uninterrupted service throughout the period may be for about 3 years. The partner
should possess a good bank of skilled consultants in order to continue the support and also to bring the best
practices from their experience in other implementations (Robert, 2011). Therefore, implementation partner
becomes a CSF due to the value addition created by them.
The implementation partner becomes a strategic choice as it determines the level of change expected within
the organization with the ERP (Stanciu & Tinca, 2013). Based on the exposure of users and the skills of
internal Information and Technology department, support required for the implementation and maintenance
of the system will be determined (Leimeister & Huber, 2009). Hence after assessing the internal strengths, a
partner need to be selected in order to drive the implementation to achieve required objectives. Based on the
above academic findings, implementation partner is considered as a CSF under strategic factors.
2.8.2.2 Top Management Support
Top management must be a part of the implementation. Bingi et al (1999) has illustrated that for
technological development projects top management support is critical as it should be driven by top to
bottom. But in many organizations, still the top management believes that IT implementations are primarily a
function of technological development and the responsibility is assigned to IT department (Ke & Wei, 2008).
Laudon and Laudon (1998) have demonstrated implementing an ERP system is not a matter of changing
software systems; rather it is a matter of repositioning the company and transforming the business practices.

21
Further, top management needs to publicly and explicitly identify the project as a top priority (Bingi, et al.,
1999). Then the message is passed across the organization to consider the ERP project seriously and give
priority. Therefore, Top management support is identified as a CSF driving the project success.
Since the top management poses the vision and plan how the business will be driven, they will be the agents
to synchronize the ERP with the business strategy (Scobbo, 2014). In addition, top management need to
realign the organization based on the new ERP and publish new policies, changes to organization structure to
adopt the best practices with the new system (Hedman, 2010). Further, all these changes need to be in line
with the business strategy enabling the company to achieve short term and long term goals. Therefore, top
management support can be considered as one of the key CSFs representing business strategy.
2.8.2.3 Project Management
An implementation project will include series of activities, tasks, multitude of stakeholders, quick decision
making and coordination. Ensuring the activities are well planned and completed will be the key role in
Project Management (Hedman, 2010). Then including the unplanned activities to the project plan and
prioritizing activities will be another challenge. Further, reporting the project status and highlighting any
risks to the steering committee also will be tasks under project management (Grunert, 1992). Therefore,
effective project management will be key to drive the project to success. Due to the complexity of the
project, coordinating and driving the activities will not be mere operational work. But managing it without
disturbing to routine operations and the project delivery on schedule will be a strategic task (Ram, et al.,
2015). Hence project management is a component of the strategic factors.
2.8.2.4 Training
In any implementation of new process or a system, training is a CSF (Grabski, Leech, and Lu, 2000). Hence
it can be argued that it is not only related to ERP to consider it as a CSF which determines the success of the
implementation. Since ERP is a complex system, training need to be comprehensive and training will have to
be repeated. Further, there will be many difficulties in conducting training for an ERP as it will be new and it
will change the users’ routine work. The resistance to change will also impact the success of training
program as the users need to be motivated to participate and learn.
Further, unless the organization’s senior management promotes learning and development, there will not be
any interest in learning. Hence organization strategic direction enhances the effectiveness of training
(Wickramasinghe & Karunasekara, 2012). Furthermore, training is considered as a CSF factor because

22
effectiveness of training will affect the effective use of new ERP after implementation (Rabaai, 2009). Also
strategically management need to decide who will be trained as they will be the next management team of the
organization. Therefore, training is categorized as a strategic CSF.
2.8.3 Tactical Factors
Based on the strategic and cultural factors, tactical factors need to be developed in order to complete the
project successfully. At the end, in the given culture with set strategy, tactical factors would be the most
critical to complete the project successfully (Krotov, et al., 2011). Likewise, Robert (2011) has stated that
cultural factors will assist in understanding the environment while strategical factors will set the road map
with the deliverables but tactical factors will only enable successful completion. However, tactical factors
will be common for most of the projects. In this research, project planning, close monitoring and evaluation,
software package, exposure of the organization to ERP and post implementation support are considered as
tactical factors which are specific to implementations (Akkermans and Helden, 2002, Hawari and Heeks,
2010). These tactical factors will enable the smooth flow of events during the implementation which will be
key to successful completion.
2.8.3.1 ERP software package
The selection of software is a key element which enables the achievement of organization’s requirements. If
the wrong product is selected then implementation process will be complex and many customizations will be
needed to cater the organization’s requirements. As a general rule an ERP should be implemented with
minimum customization in order to get continuous support from the software vendor and upgrading the
software will be complex after customizing the software (Perera & Costa, 2008). In addition, customizations
will need more effort and time hence there is a high chance for over spending the budget and not completing
on time if the selected software is not suitable. Also, the customizations will obstruct adoption of best
practices and business process re-engineering to enhances the efficiency of the operations (Ahmad & Cuenca,
2013; Bingi, et al., 1999).
Also ERP software need to be selected in line with the business operation. An investment in technology need
to be decided based expansion expected in operations and how fast information is required for decision
making. In operating the business effectively and efficiently lot of data to be analyzed and many scenarios
need to be considered then the complexity of required ERP will be different (Letiche & Moriceau, 2014).
Therefore, selection of the software is considered under tactical factors.

23
2.8.3.2 Project planning
Another CSF deliberated under tactical factors would be Project Planning. This will include how the overall
implementation project will roll out. For instance, under project planning, the implementation could be
divided in to different phases and it can be planned to implement the complex modules once the basic
modules are settled which will enable a successful implementation (Shatat, 2015). Also the cut over strategy
would be another key milestone to be planned. That will decide how the organization will migrate to new
system (Naderinejad, et al., 2014). It is apparent that all the key tactical decisions are made under project
planning. Thus, it should be aligned with the business operations and should facilitate smooth transition.
Another key requirement in planning would be that plan should be achievable and challenging hence
optimum efficiency during implementation will be achieved. Accommodating unplanned events, deviations
in activities from the schedule and re-planning activities to minimize the impact of unforeseen events in
completing the project on time successfully. Fang and Patrecia (2005) have established that comprehensive
project planning is essential to ensure the success of the project. Since an ERP implementation will not be a
short-term assignment but it is a journey to improve the processes, project planning will not be merely an
operational task but a strategic element in the management of the organization (Ehie & Madsen, 2005). In
addition, project planning is one of the key elements in project management which is separately identified in
this research to highlight the importance of planning in delivering a successful implementation (Aldammas &
Al-Mudimigh, 2011)
2.8.3.3 Post Implementation Support
An ERP implementation will not be completed with marking the “go-live”. It is more difficult to maintain
and settle a new system than configuring and implementing hence more effort and expertise are required for
post implementation support (Schniederjans & Yadav, 2013). Further, a comprehensive post implementation
support becomes essential because the system will be new to all users, there will be knowledge gaps, systems
bugs, re-alignment in operational processes and most importantly organizations operations should not be
interrupted hence all the issues occurred need to be resolved immediately (Wickramasinghe and
Gunawardena, 2010; Hedman, 2010 (Belassi & Tukel, 1996)). Therefore, post implementation support
should be strategically decided considering the operational requirement to avoid interruption to business.
In addition, in the long-term organization need to determine how the ERP will be maintained, whether the
support will be outsourced or internally required skills will be developed. A cost will be involved in post
implementation support hence based on the business operations, most suitable and economical post

24
implementation plan should be selected (Hawari & Heeks, 2010; Bingi, et al., 1999). As per above Post
implementation support is considered as a CSF under tactical factors.
2.8.3.4 Close Monitoring and Regular Evaluation
Any project need to be continuously monitored and validate the assumptions made during the planning stage.
Changes in the assumptions need to be identified and the plan should be changed accordingly. Further
unexpected events and activities which are not completed as per the plan need to be considered and the
project activities need to be re-aligned (Letiche & Moriceau, 2014). As per the above illustration close
monitoring and regular evaluation would be necessary for completing the project successfully. However,
Akkermans and Helden (2002) and Grunert (1992) have argued that monitoring and evaluation is part of top
project planning or project management as both factors cover monitoring and evaluation. The perception
covered in continuous monitoring and evaluation in day to day activities by the implementation team but
project management will be more in senior level and only major deviations will be highlighted in steering
committee (Leimeister & Huber, 2009). Thus it is identified as a separate CSF under tactical factors.
2.8.3.5 Exposure of the organization to ERP
Perera and Costa (2008) have claimed that methodology of the implementation will be determined based on
the ERP experience and knowledge available in the organization. If the organization is already using an ERP
then the company is exposed to key characteristics of ERPs such as integration, system controls, work flows,
etc and the organization culture is used to ERPs. Also the staff will be exposed to system terms and less
effort in training the new system will be required (Ram, et al., 2015). In addition, since the organization is
operating based on system process outlining the requirement and developing the new ERP will be easier.
However, exposure to different systems could lead users to compare the new and old systems and complain
on the complex processes in the new system (Letiche & Moriceau, 2014). Further, changing the users to new
process also could be difficult as they are used to the previous process without understanding the business
operation. Hence previous exposure of the organization to ERP is considered as a CSF. The level of exposure
to ERP will determine the tactical activities of the ERP implementation therefore it is considered as a tactical
factor.
2.9 Conclusion
After reviewing the existing literature on ERP and CSFs of implementations, the objective was to present
further evidence on CSFs of ERP implementations for Sri Lankan companies. Due to the complexity of
implementations, it is important to review the experiences of earlier implementations and identify the key

25
factors to focus. But literature regarding Sri Lankan companies were less hence this study will be useful for
Sri Lankan companies pursuing ERP implementations.
As per the literature, ERP and the success of ERP implementation can be defined in many ways. ERP is
regarded as a single integrated system facilitating all activities of an organization. An implementation is
considered as successful if the benefits of the ERP is realized. After evaluating 18 CSFs 12 most common
CSFs were identified to further review. Top management support, Project management, User training,
Organization Culture and Previous ERP exposure were identified as CSFs by many authors. It has been
established that all the factors are inter-related. The identified CSFs were grouped as tactical, strategic and
cultural factors for evaluating the most important base for a successful implementation. As per the literature
strategic and cultural factors were significant than the tactical factors for the success of the implementation.

26
CHAPTER 3 – METHODOLOGY
3.1 Introduction
The main objective of this study is to identify the CSF of ERP implementations and their relationship with
success of implementation. Literature review in chapter 2 will support in understanding the theoretical
background in relation to this study. Methodology chapter will provide the basis of how the research is being
carried out. This paper measures ranks of each CSF and calculate the statistical correlation with success of
implementation. Further, CSFs are grouped based on the past literature and the most significant CSF group is
identified. Finally a regression model is presented to forecast the success or to assess the readiness of the
organization for a successful implementation.
3.2 Research Definition
Management research is concerned not only with understanding the nature of organizations but also with
solving problem related to managerial practice (Bryman & Bell, 2007). Thus business research is considered
to as an applied filed. Creswell (2008) has defined research as a process of steps used to collect and analyze
information to increase our understanding of a topic or issue. Further, a research should include a question,
collection of data to answer the question and recommending the most suitable answer. However, Reay, Berta
and Kohn (2009) have found that none of the organizations has improved performance by using evidence
based management. Entrepreneurial success is mostly due to the decisions with gut feeling and findings of
researches are used to enhance the knowledge in order to enhance the probability of success.
This is a deductive research as it is based on currently available research findings and tested the same with a
survey for applicability of the findings in Sri Lanka. After reviewing existing literature on ERP, key benefits
and limitations, CSFs of ERP implementations and ERPs in Sri Lanka, how the research problem will be
addressed in this research need to be decided. As defined previously, objective of this research is to identify
the key factors affecting the success of ERP implementation. Most appropriate 12 variables are selected as
explained in chapter 2 for this study considering Sri Lankan context. Further, based on the previous
academics the variables are grouped as strategic, cultural and tactical factors. The conceptual frame work for
this research can be demonstrated from below diagram.
The CFSs identified from empirical research will be the independent variables. The data will be collected as
ranks. Dependent variable would the success of the implementation. 12 factors which were deliberated by
other authors have been considered as the independent variable (table 2). The factors were grouped to 3 main

27
categories based on the past literature with a view to identify the most important category in ERP
implementation and the contribution on each category for the success of the implementation.
Figure 3 Conceptual frame work
3.1.1 Variables
In addition, demographic information was not collected via the survey as it has less relationship on the CSFs
as per previous academic findings. However, to cover the descriptive analysis and to understand the
participants of the survey based on their level of exposure and involvement in the ERP implementation were
inquired in the survey.
3.1.2 Research Objectives Validation Criteria
The research questions were tested using the statistical software to determine the correlation and regression.
Based on the correlation, it is anticipated to identify the most critical factors statistically. Statistical analysis
will be carried out in two phases, first individual variables will be tested then the grouped variables will be
considered. Finally, a regression model will be fitted to identify the most significant factors.
CULTURAL
Change Management
ERP core team composition
Organization Culture
STRATEGIC
Top Management support
Training
Implementation Partner
Project Management
ERP
IMPLEMENTATION
SUCCESS/FAILURE
TACTICAL
Software / ERP Package
Monitoring and evaluation
Previous ERP exposure of the
organization
Post Implementation support
Project Planning

28
3.2 Research Philosophy
Based on Saunders , et al., (2007) research onion classifications, this research is based on epistemological
positivism philosophy since the research uses quantitative data survey and previous academic findings as a
base of the study. The previous findings will be used as a base of this research and the objective would be to
identify the most influential factors in Sri Lankan context. Closed questions with ranking, rating and
categorical answers were selected to gather data as if the qualitative data is collected and interpreted to ranks,
there can be errors in interpretation (Bryman & Bell, 2007). The findings of the research may not be valid if
the research was structured based on qualitative data hence interpretivist philosophy was not selected for this
study.
3.3 Research Approach
A research could be mainly approached in two ways. One approach could be developing a new theory
starting with observations then testing tentative hypothesis and developing a theory which is called as
inductive approach (Bryman & Bell, 2007). The other approach is deductive approach; it will be based on
existing theory and testing against the validity of the same theory. The result of the research could be the
confirmation of the existence of the theory or any new findings will be added to the theory (Saunders , et al.,
2007; Sekaran & Bougie, 2009). In this research, concept of Critical success factors is tested against the ERP
implementation success. As this research is based on existing theory, the research is based on deductive
approach. Based on CSFs theory the factors contribute to success of the implementation are identified in this
research.
3.4 Research Strategy
Saunders (2003), define research strategy as a general plan that helps researcher in investigating the research
questions in a systematic way. Examples of research strategies would be survey, case study, experiment,
action research, grounded theory and ethnography. In order to achieve the research objective, survey research
strategy is used to identify people’s opinion on CSFs. Key advantages of using a survey which is easier to
administer, several questions can be included in one survey, capable to reach large number of respondents
and can be administered remotely (Bryman & Bell, 2007; Creswell, 2008). However, the surveys may not
reveal accurate and honest answers since it is conducted remotely. The respondents might fill it up randomly
rather answering the questions as individual attention is not given. Further, respondents might not understand
and interpret the questions the way researcher anticipated hence incorrect answers would be given

29
(Wickramasinghe & Gunawardena, 2010). To validate the interpretations and the clarity of survey questions,
the questionnaire can be tested with few independent respondents before the final survey.
3.5 Data
Based on the sources of data, it can be categorized as primary or secondary data. If the data is collected based
on the research objective, then it would be called primary data. Secondary data would be the use of data
which is already collected for a different purpose (Bryman & Bell, 2007). Previous academic findings were
referred with the purpose of identifying the CSFs linked with ERP implementations. Thus, CSFs were
identified using the secondary data. It was set as the base for the research. Then primary data need to be
collected to achieve the research objective using a data collection tool in the selected sample.
Data collection tool should be synchronized with research strategy. Examples of tools would be a check list,
interviews, questionnaires and observation. For survey research strategy, data collection tool would be a
structured questionnaire. A questionnaire will include standard set of questions which will explore the
research objective and collect information on the respondent’s opinion (Gunawardena & Wickramasinghe,
2010). For this research, closed questions were used with specific answers to be selected by the respondent.
Further, the questionnaire was built in a way the participants need to provide an answer from the given
selection without giving other comments. This helps in terms of getting structured data then in making
inferences but it may not be the real opinion of the participant (Alvesson & Deetz, 2000). Similarly in
providing the ranks, it was restricted giving the same rank for two variables with the intention of eliminating
ambiguity in research findings. Hence the respondents are forced to rank the variables carefully (Creswell,
2008). However, this could lead providing inaccurate data since the participants do not have the flexibility of
providing the answers as they desire (Dharmarathne, 2004).
3.5.1 Population and Sample
As stated in the previous chapter, the objective of the research is to identify the CSFs affecting the success of
ERP implementations in Sri Lanka. Hence the population is defined as Sri Lankan companies who have
implemented ERP within last 15 years. There are no published records of the companies that have
implemented ERPs hence the population was identified by asking the main ERP vendors in Sri Lanka and
through industry contacts. Thus sampling frame is not complete and up-to-date (T.S. Madurapperuma, et al.,
2009).

30
Snow ball sampling method which is a non-probability sampling process was used as the companies were
identified via the contacts. Saunders , et al. (2007) states that snow ball sampling process is one of the
popular form used for studies including surveys. 10 implementations were selected then a questionnaire was
shared among the users, management, ERP consultants, observers and Core team. 15 members from each
implementation were selected covering the above audience to participate in the survey (Ahmad & Cuenca,
2013). However, the challenge was reaching users, implementers, top management within the companies.
Then they were approached via the contacts in the organization which is again snow ball sampling.
3.5.2 Questionnaire
The questionnaire was prepared by using similar format and questions used by other academics such as
Gunawardena and Wickramasinghe (2010) and Dharmarathne (2004). All the CSFs were identified using
previous studies (table 2). The questionnaire was prepared with closed end questions and it included only 30
responses which can be completed within 5-10 minutes to enhance the response rate (Bryman & Bell, 2007).
Before circulating the questionnaire, it was sent to few participants and taken feedback on the
understandability and interpretations of the questions. In addition, since a web-based questionnaire was
created, automated validations were used to avoid incomplete and inaccurate data.
3.5.3 Data Collection
The questionnaire was created using www.surveymonkey.com and the link was shared with the respective
participants. Initially tried sending the email notification requesting the completion of the survey which failed
as most of the emails were filtered as junk emails and was not received by the selected participants.
Therefore, the link was shared using a personal email. Since in most of the organization the contacts
available were not sufficient to cover all the audience groups, it was requested for the contacts to share the
link with the respective other groups. The idea of getting opinion form different stakeholders is to cover the
different perceptions of CSFs on ERP implementations.
The questionnaire was sent to 150 individuals in 10 different companies as per the objective. Three
individuals from each category of users, management, observers, core team members and consultants were
intended to approach. One limitation was in reaching the core team members, consultants and management
members was, some of the members involved in the implementation have left the respective organization.
The questionnaire was kept open for 16 days and 93 responses were received out of the 150 individuals.
Mostly the individuals who are currently involved in ERPs have responded. Another limitation was for few
implementations ERP vendor and implementation partner were the same organization. Hence finding 30

31
different individuals under ERP vendors were difficult. However, the questionnaire was sent to 30
individuals in ERP vendor’s Sri Lankan office and the agents of the ERP vendors in Sri Lanka.
When analyzing data, it was identified that the respondents have not selected the group they were intended to
represent. Also the sample could not be selected equally from each ERP package as mostly SAP and Oracle
packages were used. Consequently, data collected will be analyzed to identify any variations are there based
on the software package.
3.5.4. Strengths and Limitations
Online questionnaire was a convenient method to collect data and it allowed to reach the required audience
(Bryman & Bell, 2007). Since the population was not well defined and snow ball sampling method was used,
the data collecting tool had to be flexible and simple. Online survey link could be shared easily with the
identified respondents and then they could easily share with the other respondents (Creswell, 2008).
However, it will be difficult to reach the respondents who does not have internet access to collect data. As
this was survey is related to ERP, all the respondents were computer literate, hence reaching the respondents
with online survey method was not a limitation but an advantage (Garg & Garg, 2014).
Further, it was easier to develop online and administer compared to other data collecting methods. Another
advantage was the responses given could be validated at the point of data entering and data could be directly
collected in the format to analyze (Saunders , et al., 2007). In this survey, key data collected was the ranks of
the critical success factors and the data was collected in a way that respondents cannot enter same rank for
two factors (Gunawardena & Wickramasinghe, 2010). In addition, collection of data and some basic
statistics could be monitored during the data collection period to validate the reliability of the data collected.
Hence the online survey method enabled collecting useable data faster with less cost (Bryman & Bell, 2007).
As the respondents were not tracked personally and they were identified only via a respondent ID created at
the point of data entry hence the respondents would be more comfortable in expressing their views compared
to a physical data collection technique or an interview (Creswell, 2008). Conversely not having personnel
touch in collecting data could lead to non-reliable data as there is no provision to clarify the questions. Thus
the respondents might not understand and interpret the questions in the same way the questionnaire was
designed (Bryman & Bell, 2007; Alvesson & Deetz, 2000). Moreover the respondents may not be
encouraged to provide accurate and honest answers instead they might choose the easiest path to complete

32
the questionnaire. In addition, there can be non-responses leading to data errors and then incorrect findings
(Reay, et al., 2009).
3.5.5 Data Analysis
In order to analyze data, Microsoft excel and SPSS tools were used. Since SPSS outputs are not reader
friendly most of the figures and tables used in the research are generated in excel.
Data was directly downloaded from the online survey site and the descriptive analysis was carried out in
excel. The data was loaded to SPSS for inference analysis. Correlation and regression analysis were carried
out under inference analysis.
3.6 Conclusion
This chapter illustrates how the research will be carried out and explains theories used in building up the
scope of the study. CSF frame work is adopted and main 12 factors are identified using prior studies by
following the deductive approach. Then priority of the identified CSFs will be surveyed among individuals
involved in ERP implementations in Sri Lanka. The sample is identified through snow ball sampling and data
is collected through an online questionnaire. Also it was noted that there is no published data on the
companies who have implemented ERPs hence identifying the population was ambiguous. The sample was
limited to 10 companies who have implemented a complete ERP within last 10 years and responses will be
taken from 15 individuals involved in ERP implementation covering all the perceptions.
The collected data will be initially analyzed using descriptive statistical measures and a common rank for the
CSFs will be derived. Further, the collected data will be evaluated to identify if there is any difference in the
significance of CSF based on the ERP package used or by the respondent’s exposure to ERP. Then the data is
statistically evaluated to identify the correlation between the CSFs and to identify the factors which are
significantly correlated with success of implementation. Finally, a regression model will be fitted to identify
the most significant CSFs. In addition to the individual factors, the research identifies three main categories
as cultural, tactical and strategic factors and they are also evaluated statistically to identify the key categories
to be focused to achieve successful implementation.

33
CHAPTER 4 – DATA ANALYSIS
4.1 Collection of data
93 responses were received during a period of 2 weeks from the sample of 150 including users, observers,
functional consultants, core team members, implementation partners and ERP vendors of 10 different
implementations in Sri Lanka. Saunders (2007) has identified usual non-response rate as 35% and this survey
had 38% non-responses. Collecting data is considered as one of the most challenging tasks in research and
response rate above 50% could be satisfactory. Out of the 93 observations collected 84 were complete and it
is a sufficient collection of data for inference analysis (Bryman & Bell, 2007). Therefore, it was decided to
proceed with the further analysis only considering the complete responses. It eliminates erroneous
conclusions due to incomplete response (Pigott, 2001).
4.2 Descriptive Statistics
In identifying the composition of the sample where the data is collected, descriptive statistical analysis will
be carried out. The figure 4 illustrates the respondents’ exposure to ERP. As the subject of ERP is a
specialized area and the participants of the survey need to be exposed and familiar with the concepts of ERP
to achieve valid results (Bryman and Bell, 2007;Tsaih, et al., 2015). 68% (57 respondents) of the
observations are received from the individuals who are certified consultants or who have experience in ERP
implementations who can be considered as experts in ERP. Rest of the responses (32%) are from the
individuals who are new to ERP or only have used ERP.
Figure 4 Composition of Respondents based on Knowledge in ERP

34
When it is further analyzed on the 32% (Table 3), which indicates that the majority of them are involved in
ERP implementations (Core team members, implementation partners, functional consultants or ERP vendors)
but with less experience in EPR implementations. Hence all respondents can be considered as exposed to
ERP and majority (86%) as exposed to ERP implementations.
Table 3 Composition of New to ERP respondents
When ranking the CSFs, data will be further analyzed by the exposure to ERP to identify if there is any
difference in the findings. Table 4 demonstrates that most of the respondents have experience in SAP and
Oracle implementations. For further analysis, all other software will be considered as other. Below table also
shows that 33% (28 respondents) of the respondents are functional consultants and 25% (21 respondents) of
the respondents are core team members of implementations. Therefore, it is apparent that majority of the
responses are from individuals who are heavily involved in ERP implementations and the view of the user or
observers will not be prominent. The advantage would be that the findings will be valid as they have
comprehensive experience in implementations but the findings will not include all perceptions as expected.
For SAP and Oracle software’s all stakeholders have responded but still the results will be biased as
explained above.
Table 4 ERP software Vs Respondents' level of involvement
In inference analysis, software will be considered as SAP, Oracle and Other in order to determine if there is
any difference in CSFs of implementation.
Your knowledge in
ERP User
Implementation
Partner
Core Team
Member
Functional
Consultant Observer
ERP
Vendor
Grand
Total
Have used ERP before 6 2 4 1 2 1 16
New to ERP 5 3 1 2 11
Grand Total 11 5 5 3 2 1 27
Level of involvement in the Implementation
SAP Oracle Infor Other IFS
Microsoft
Dynamics
Grand
Total
Functional Consultant 14 9 4 1 28
Core Team Member 9 6 1 1 3 1 21
User 7 2 1 1 1 12
Implementation Partner 3 5 2 1 1 12
Observer 2 2 2 6
ERP Vendor 1 1 2 1 5
Grand Total 36 25 10 5 5 3 84
ERP software
Level of involvement

35
Figure 5 Relevance of Industry to implementation success
Out of the complete responses received, 55% (46 respondents) believe that the industry is not relevant in
determining the success of the ERP implementation. 15% of the individuals (13 respondents) have responded
as it will be easier to implement in manufacturing industry and 17% (14 respondents) believe the
implementation would be easier in trading industry. If it is further analyzed by the stakeholder groups, most
of the functional consultants, core team members and implementation partners think that the industry is not
relevant in making an ERP implementation a success. In inferences analysis, it can be investigated if there is
any relationship between industry and the CSFs.
Further, it was surveyed whether the exposure of the company would impact the success of the ERP
implementation. Figure 9 illustrates that 50% of the individuals (42 respondents) think it would be easier to
implement when it is the first ERP experience in the organization. 27% of the responses (23 respondents)
denote that if the first-time experience and the operational processes are set up implementation would be
easier. It is vital to note that 23% of the respondents (19 respondents) think exposure of the company is not
relevant for the success of ERP implementation. It seems that changing a system over a legacy system is less
preferred.
As per the above descriptive statistics it is apparent that the responses are received from the ERP experts and
the responses will not cover all the stakeholders’ perception in the findings. However, ERP been a
specialized area the data received would be reliable and valid as they are mostly provided by the individuals
who are heavily involved in ERP implementations.

36
Figure 6: Exposure of the company
4.3 Descriptive analysis of critical success factors in ERP implementations
As explained in chapter 3, the respondents were requested to rank the CSFs identified using previous studies.
The respondents could not provide the same rank for CSFs hence they were compelled to prioritize the 12
factors and this will help to identify the key CSFs (Perera & Costa, 2008). Since the data is collected in ordinal
scale, mean of the ranks cannot be calculated. Hence the given data is summarized using median and mode
with the aim of identifying the top CSFs (Chung, 2007). Also the sum of ranks of each CSF is taken a as a
general score to identify the criticality of the factor (Fang & Patrecia, 2005).
As per table 5, the rank derived from score, mean and median are same. However, when mode is used for
ranking there is a change in organization culture. As per the mode, culture is prioritized as the sixth CSF but
all other measures prioritize the same as the third CSF. Mode represent the rank preferred by most of the
respondents. Since this survey is not measured with scale data, mode will be a good measure for identifying
the preference of the CSFs. Median could be a good measure to identify the key CSFs as it will be based on
the center of the ranks received and will not consider if there are any extreme observation. Ahmad, et al.
(2012) and Dharmarathne (2004) also have used mode to rank the CSFs relatively.
For each CSF, a score was calculated by summing up all the ranks. Then the sum could be used as the rank
given by all the respondents to each CSF. The score could be affected with the outliers and adding up ordinal
data might not be the perfect measure. However, median and score both suggest the same priority order for

37
the CSFs which denotes there is no major outliers in collected data. These methods of ranking are used by
Garg and Garg (2014) and T.S. Madurapperuma, et al (2009) in their studies.
Table 5 Ranking of CSFs using measures of central tendency
Further, the ranks of CSFs are analyzed by count and the CSF with most number of preferences in the given
rank is identified as the final rank of the CSF. The CSFs with most number of preferences in each rank can
be prioritized as per table 6 (Appendix C).
Table 6 CSF rank based on frequency
However, the top 7 items would be same as it’s suggested by other measures in above. Top management
support would be the most critical factors as it was highlighted from other measures but other CSFs would be
differently ranked within top 7 of the ranks. The variance of ranking is not dramatic hence it can be
CSF Median Mean Mode Sum
Top Management Support 3 3.55 1 298
Change Management 4 4.73 2 397
Organization Culture 5 5.39 5 453
Project Planning 5 5.65 2 475
Project Management 5 5.58 4 469
Software / ERP package 6 6.01 4 505
Implementation Partner 6 5.93 7 498
Training 7 7.02 9 590
ERP core team composition 7.5 7.11 11 597
Close Monitoring and regular evaluation 9 8.58 10 721
Post Implementation Support 10 9.21 11 774
Previous Exposure 11 9.23 12 775
Ranks CSF
1 Top Management Support
2 Change Management
2 Project Planning
4 Implementation Partner
5 Project Management
5 Software package
7 Organization Culture
8 Training
9 Close Monitoring and regular evaluation
10 Post Implementation Support
11 ERP core team composition
12 Previous Exposure

38
considered the ranking is same as the ranking from median or score. As median, would be the most scientific
and reasonable way to rank the CSFs and there are no major differences in ranks when other methods are
used, median can be used for identifying the significance of CSF (Gunawardena and Wickramasinghe, 2010;
Ahmad, et al., 2012).
Further, the ranks based on the median for each CSF was analyzed based on the different categorical
variables identified. Ranks for CSFs were derived based on the respondents experience in software package.
As per figure 5 it is clear that most of the CSF are ranked irrespective of the Software package they are
exposed to. However, when SAP users think project planning is more important other ERP users think it as
less important factor for the success of the implementation, similarly when other system users think the
software package is more important SAP and Oracle users think it as a less important factor for the success of
the implementation.
Figure 5 Ranks of CSFs based on software used
Figure 6: Ranks of CSFs based on experience in ERP

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