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A STUDY ON THE ANALYSIS OF CRITICAL SUCCESS FACTORS BEHIND MOTIVATION FOR ADOPTING ERP IN MANUFACTURING UNITS: A CASE STUDY OF KERALA STATE.

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International Journal of Mechanical Engineering and Technology (IJMET)
Volume 10, Issue 01, January 2019, pp. 1722-1730, Article ID: IJMET_10_01_171
Available online at http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=10&IType=01
ISSN Print: 0976-6340 and ISSN Online: 0976-6359
© IAEME Publication
Scopus Indexed
A STUDY ON THE ANALYSIS OF CRITICAL
SUCCESS FACTORS BEHIND MOTIVATION
FOR ADOPTING ERP IN MANUFACTURING
UNITS: A CASE STUDY OF KERALA STATE.
Arjun K Sunil and Sriranjini S
Department of Management and Commerce,
Amrita School of Arts and Sciences Mysuru, Amrita Vishwa Vidyapeetham,
India
ABSTRACT
Manufacturing is a key infrastructure element needed for smooth operations of any
countries economy. Indian manufacturing sector is currently in the development stage
that changes quickly and change the way they operate in the past. Enterprise Resource
Planning provides one of the most significant factors or contributing factors to the
integrated environment utility. The success of ERP implementation depends on some key
convention factors, often referred to as CSF (Critical Success Factors). Some of these
factors do not matter what the business area or domain is, it is common, but some of this
factors are definitely the industry related specific factor in nature. The current research
study is based on the search for such kind of industries, namely (manufacturing industry
and distribution operations) specifically for the accomplishment of ERP implementation.
Keywords: Manufacturing sector, Industries, critical success factors (CSF), Enterprise
resource planning (ERP), ERP Implementation.
Cite this Article: Arjun K Sunil and Sriranjini S, A Study on the Analysis of Critical
Success Factors Behind Motivation For Adopting Erp in Manufacturing Units: a Case Study
of Kerala State., International Journal of Mechanical Engineering and Technology,
10(01), 2019, pp.1722–1730
http://www.iaeme.com/IJMET/issues.asp?JType=IJMET&VType=10&Type=01
1. INTRODUCTION
Enterprise Resource Planning (ERP) is an assimilated customary software module that links to a
general purpose database that handles all basic enterprise functions. It tries to integrate all the
basic functions of different departments of an organization. Enterprise Resource Planning (ERP)
can be considered as a software solution to address organizational needs after considering the
overall development which helps to organize to meet the organizational objective or goals
integrate all the features of the enterprise. The organization is providing main attention and also
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Arjun K Sunil and Sriranjini S
pays special attention to make their ERP system more efficient and effective. Even so, not all the
Enterprise Resource Planning (ERP) implementations produce the expected results. Influencing
factor that depends on the success of Enterprise Resource Planning (ERP) implementation is also
known as the critical success factor (CSF).
2. LITERATURE REVIEW
•
•
•
•
•
•
•
Holland and Light (2001) point out that life cycle models can help managers
understand the execution procedure and provide guidance on how to achieve the
strategic potential of the Enterprise Resource Planning (ERP) system. The value of
the Enterprise Resource Planning (ERP) lifecycle concept comes to conclusion that it
can provide a map to understand the development of Enterprise Resource Planning
(ERP) systems in the organization. It provides detailed information about completed
tasks and tasks done in the next steps which could provide managers with a sense of
implementation decision making.
Rockart (1979) considers key success factors (CSF) to be a helpful method for
manager’s to state their information requirements and link those necessities to the
general business requirement. Rockart defines key success factors as limited number
of region or areas which results, if they are suitable and they will ensure their
competitive performance in the organization. The critical success factor (CSF) can be
regarded as a business activity which can be measurable and easy to understand to
ensure project success.
Jenster (1987) pointed out that one of the benefits of the critical success factor (CSF)
approach is that it can be determined strategic related facts. Jenster said that key
success factors (CSF) are events, circumstances, conditions or activities related to
basic internal or external environment of the company's strategy, or the capabilities or
resources it must have accomplished.
Markus and Tanis (2000) stated Enterprise Resource Planning (ERP) success factor
as “the best outcomes of organization that could possibly achieve with enterprise
systems, given its business situation, measured against a portfolio of project, as early
stage of operational and longer term business results metrics”. However, the
Enterprise Resource Planning (ERP) execution is a complex process and must
incorporate reflection of the intangible process alterations and details.
Jeff K Stratman and Aleda V Roth (2002), this paper describes eight ERP capability
builds. They describe ERP competence as an assortment of technical, managerial and
organizational talent and proficiency as background, to develop the performance of
business, after the implementation of the Enterprise Resource Planning (ERP) system.
Organizations are increasingly adopting ERP systems, to improve their responses to
the changing markets.
Gattiker & Goodhue (2005) studied the time elapsed since the implementation of
Enterprise Resource Planning (ERP). Through the collected data, they carried out a
regression and obtained the relationship between the incremental returns of the first
year and the first year since the ERP was launched. They found that performance
continues to grow at a decreasing rate.
Valerie Botta – Genoulaz and Pierre – Alain Millet (2004) has said that, of late even
service organizations have empowered themselves, by the implementation of ERP
systems. They have even started using elucidation which was building up for
manufacturing companies. This paper gives an insight on, how services can also
approach ERP implementation.
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A Study on the Analysis of Critical Success Factors Behind Motivation For Adopting Erp in
Manufacturing Units: a Case Study of Kerala State.
•
•
Davenport, Harris & Cantrell (2006) elaborates on the benefits of the organization and
examines the benefits of long-term enterprise solutions, includes improved financial
controlling, faster and more accurate transactions, better management decisions, and
improved inventory and asset management. Simplify expansion and growth and better
flexibility, reduce physical resources and improve logistics, reduce cycle time
improve customer service and retention, reduce employee numbers and increase
revenue
Ross & Vitale (2000) described the five phases of Enterprise Resource Planning
(ERP) implementation which includes design, stability, implementation, continuous
improvement and change. In the design phase, management decides whether to
change the original process to fit the ERP system or to personalize ERP to limit
process changes. They must consider process standardization issues. In the
implementation phase, the ERP system is active through new systems and new
procedures. There are usually some weird performances that degrade performance.
During the stabilization phase, they must reduce the impact of the implementation
phase and clean up their processes and data to accommodate the new system. In the
continuous improvement phase, they have adapted to the system and began to take
full advantage of the system, integrating more modules, adding more features to make
a profit. The conversion phase is the most ideal state for Enterprise Resource Planning
(ERP) implementation.
3. RESEARCH GAP
This research study is based on reviewing a number of research journal paper publications and
internet data based information and found that no research study is done on the bases of critical
success factor (CSF) which motivate the execution of ERP in manufacturing units with special
reference to Kerala state.
4. OBJECTIVES
•
•
•
To study the different critical success factors in ERP implementation in manufacturing
sectors of Kerala state.
To identify whether HR factors is a significant factor for ERP implementation in
manufacturing units of Kerala state.
To ascertain the most significant key success factors for effective Enterprise Resource
Planning (ERP) execution in Kerala state.
4. RESEARCH DESIGN
A structured questionnaire was designed on key success factors for Enterprise Resource Planning
(ERP) implementation in manufacturing units of Kerala state based on their different departments
and preferences for ERP implementation. In-depth interviews were conducted with Managers of
different organizations with the help of the designed questionnaire. The information collected
was analysed with the help of statistical tools to find the most important key success factor based
on their responses.
4.1. Hypothesis
H01: There is no significant association between HR factors and implementation of ERP in
manufacturing sectors of Kerala state.
H02: There is no significant association between Management factors and implementation of
ERP in manufacturing sectors of Kerala state.
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5. ANALYSIS AND INTERPRETATION
Analysis is based on by considering strongly agreed results with a weightage given to more than
50% or equal value for identifying the most critical success factors (CSF) for Enterprise Resource
Planning (ERP) implementation.
Management factors
80
70
Goals are clearly defined and
implemented
60
50
The composition of the project
team in the client organization
40
support and the involvement of
the top management
30
20
coordination between the
departments
10
0
Strongly Agree
Agree
Not agree
70% of the respondents strongly agree with goals are clearly defined and implemented, 58%
of the respondents strongly agree with the composition of the project team in the client
organization, 57% support and the involvement of the top management and 59% of the
respondents strongly agree with coordination between the department. The above graph shows
that goals are clearly defined and implemented, the composition of the project team in the client
organization, support and the involvement of the top management and coordination between the
departments are the main management factors for adopting ERP in manufacturing units.
HR Factors
70
organizational culture on
accepting ERP
60
50
piloting management training
programs
40
30
20
excellent linking among
different users and
implementation team of ERP
10
user involvement and training
0
Strongly Agree
Agree
Not agree
64% of the respondents strongly agree with organizational culture on accepting ERP, 59% of
the respondents strongly agree with piloting management training programs, 55% of the
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A Study on the Analysis of Critical Success Factors Behind Motivation For Adopting Erp in
Manufacturing Units: a Case Study of Kerala State.
respondents strongly agree with excellent linking among different users and implementation team
of ERP and 64% of the respondents strongly agree with user involvement and training. The above
graph shows that organizational culture on accepting ERP, piloting management training
programs, excellent linking among different users and implementation team of ERP and user
involvement and training are the main HR factors for adopting ERP in manufacturing units.
Project Related Factors
60
50
Assessment of ERP before
implementing in project
40
current planning of project
30
20
Complete partispation of the
project team of the client
10
Risk of project are handled
efficiently
0
Strongly Agree
Agree
Not agree
The in have team support is
available
50% of the respondents strongly agrees with assessment of ERP before implementing in
project, 52% of the respondents strongly agree current planning of project and 54% of the
respondents strongly agree with risk of project are handled efficiently. The above graph shows
assessment of ERP before implementing in project, current planning of project and risk of project
are handled efficiently are the main project related factors for adopting ERP in manufacturing
units.
Technology & Business Factors
60
Amalgamation of different
functions of business within and
also ouside ERP
50
Accurate quality data is available
70
40
Report of legal MIS available
30
20
The old data is converted as a
necessary by ERP
10
0
Strongly Agree
Agree
Not agree
Minimum Customization
57% of the respondents strongly agree with amalgamation of different functions of business
within and also outside ERP, 63% of the respondents strongly agree with accurate quality data is
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Arjun K Sunil and Sriranjini S
available, 60% of the respondents strongly agree with report of legal MIS available. The above
graph shows that amalgamation of different functions of business within and also outside ERP,
with accurate quality data is available and legal MIS available are the main technology & business
related factors for adopting ERP in manufacturing units.
Miscellaneous Factors
60
The technical and business
knowledge of the consultant of
ERP
50
The after execution audit is
necessary to fulfill the ERP
objective
40
30
The before and after
implementation date of ERP is
measured
20
Systematic review of technical
and functional aspects of ERP
assists for excellence in
operations
10
0
Strongly Agree
Agree
Not agree
51% of the after execution audit is necessary to fulfil the ERP objective, 50% of the
respondents strongly agree with the before and after implementation date of ERP is measured,
55% of the respondents strongly agree with systematic review of technical and functional aspects
of ERP assists for excellence in operations. The above graph shows that the after execution audit
is necessary to fulfil the ERP objective, the before and after implementation date of ERP is
measured and systematic review of technical and functional aspects of ERP assists for excellence
in operations are the main miscellaneous related factors for adopting ERP in manufacturing units.
Hypothesis Testing
H01: There is no significance association between HR factors and implementation of ERP in
manufacturing sectors of Kerala state.
H02: There is no significant association between Management factors and implementation of
ERP in manufacturing sectors Kerala state.
CHI-SQUARE TEST FOR HR FACTOR
SL NO
1
2
3
4
VALUES
64
59
55
64
Expected Frequency
= 60.5
Chi-square = ∑ (Oi – Ei)2 /Ei
= (64-60.5)2 /60.5 + (59-60.5)2/60.5 + (55 – 60.5)2 /60.5 + (64 – 60.5)2 /60.5
=0.937
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A Study on the Analysis of Critical Success Factors Behind Motivation For Adopting Erp in
Manufacturing Units: a Case Study of Kerala State.
Degree of freedom = (n-1)
= (4 – 1)
=3
Table value = 7.81 for α = 0.5 and 3 degrees of freedom.
NTERPRETATION
According to the hypothesis taken with degrees of freedom being 3, the calculated value=0.937
which is less than the table value of 7.815 therefore the null hypothesis is accepted.
CHI-SQUARE TEST FOR MANAGEMENT FACTOR
SL NO
1
2
3
4
VALUES
70
58
57
59
Expected Frequency
=61
Chi-square = ∑ (Oi – Ei)2 /Ei
= (70-61)2 /61 + (58-61)2/61 + (57 – 61)2 /61 + (59 – 61)2 /61
=1.78
Table value = 7.81 for α = 0.5 and 3 degrees of freedom.
INTERPRETATION
According to the hypothesis taken with degrees of freedom being 3, the calculated value=1.78
which is less than the table value of 7.815 therefore the null hypothesis is rejected and the
Research hypothesis is accepted.
6. FINDINGS
•
•
•
•
•
•
The different critical success factors in implementation of Enterprise Resource
Planning (ERP) in manufacturing units are Management factors, HR factors, Project
related aspects, Technological and Business related factors, Infrastructure related
factors and Miscellaneous related factors.
HR factors are not a significant factor in implementing ERP in manufacturing units.
Success Factors of ERP implementation in Management related aspects include goals
are clearly defined and implemented, the composition of the project team in the client
organization, support and the involvement of the top management and coordination
between the departments are the main aspects for adopting ERP in manufacturing
units.
Success Factors of ERP implementation in HR aspects related include organizational
culture on accepting ERP, piloting management training programs, excellent linking
among different users and implementation team of ERP and user involvement and
training are the main factors for adopting ERP in manufacturing units.
Success Factors of ERP implementation in project related aspects include assessment
of ERP before implementing in project, current planning of project and risk of project
are handled efficiently are the main factors for adopting ERP in manufacturing units.
Success Factors of ERP implementation in Technology & Business related aspects
include amalgamation of different functions of business within and also outside ERP,
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•
with accurate quality data is available and legal MIS available are the main factors for
adopting ERP in manufacturing units.
Success Factors of ERP implementation in miscellaneous related aspects includes the
after execution audit is necessary to fulfil the ERP objective, the before and after
implementation date of ERP is measured and systematic review of technical and
functional aspects of ERP assists for excellence in operations are the main factors for
adopting ERP in manufacturing units.
6.1. Suggestions
•
Management factors, HR factors, project related aspects, Technology and Business
related factors, Infrastructure related factors and Miscellaneous related factors plays
a major role in implementing ERP in manufacturing units.
• For a successful implementation of ERP in manufacturing unit depends up on the
management related factors like goals are clearly defined and implemented, the
composition of the project team in the client organization, support and involvement
of the top management and coordination between the departments are the main
reasons for adopting ERP in manufacturing units.
7. CONCLUSION
This research aspires to enhance to understand different critical success factors in implementation
of Enterprise Resource Planning (ERP) in manufacturing units of Kerala state. Based on the
present research study Management related factors, HR factors, Project related aspects,
Technology and Business related factors, Infrastructure related factors and Miscellaneous related
factors all plays a major role in the implementation of ERP in a manufacturing units. Success
Factors of ERP implementation is based on goals are clearly defined and implemented, the
composition of the project team in the client organization, support and involvement of the top
management and coordination between the departments are the main factors for adopting ERP in
manufacturing units.
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A Study on the Analysis of Critical Success Factors Behind Motivation For Adopting Erp in
Manufacturing Units: a Case Study of Kerala State.
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