Perception of the risk factors associated with implementation and post-implementation of Enterprise Resource Planning (ERP) systems in Jordan

Abstract

The implementation of ERP systems has increased during recent years. These systems bring a great many benefits to organisations but, at the same time, have been problematic for them. A literature review showed that some companies have succeeded in implementing ERP systems while other companies have failed in this regard, illustrating that ERP systems are complex and risky to implement and operate in companies. Perceiving and understanding the risk factors related to the implementation and operation of ERP systems could have a positive impact on the success of these systems. Therefore, it is important for organisations to perceive and understand risk factors in order to make ERPs more successful and reduce the failure of their implementation and operation. Reviewing the literature helped in evaluating previous research work on the success or failure of ERP implementation and operation. It was found that there is a gap in the literature regarding understanding the risk factors related to ERP implementation and operation, as well as perceptions of those risk factors on the part of managers in the same organisations who have different levels of ERP expertise, come from different professional backgrounds, and have different cultural outlooks. This thesis constitutes an attempt to clarify the relationship between the perceptions of risks factors associated with ERP systems and cultural worldviews, professions and levels of ERP expertise. Exploratory interviews, based on a pilot study, were carried out in order to identify the main issues and also to test the risk factors proposed in the literature. Twenty seven interviews were conducted with Jordanian managers to gain an understanding of their opinions and perspectives concerning what they considered to be risk factors. The results of the pilot study elicited 20 risk factors that could lead to the failure of ERP systems during their implementation or operation. A preliminary research model of the impact of these risk factors on the implementation and operation of ERP systems was built, based on the literature and the findings from the exploratory stage of the research. Also, a framework was constructed in order to understand the relationships between different groups of managers and their perceptions of the risk factors related to the implementation and operation of ERP systems. The main groups of managers were information technology managers, financial accounting managers, auditing managers, and others groups, such as HR or manufacturing operations managers. To develop and test further the research framework, a survey was conducted. Based on the findings from the pilot study and the literature review, a survey instrument was developed. A 21-item scale to assess the four worldviews identified by Cultural Theory, a five-item scale to measure the level of ERP expertise, and a 65-item scale to assess perceptions of 27 risks factors related to ERP systems were developed. The questionnaires were sent to accounting financial managers, IT managers and other managers with at least one year’s experience with ERP systems. The major finding of the survey, obtained from a sample of 166 manager respondents, suggested that there were critical differences in perception among participating managers in Jordan according to their differing culture, level of ERP expertise, and profession. Culture, however, had a stronger effect on the perception of risk factors regarding ERP systems than profession or ERP expertise. The contribution made by this thesis is the theoretical framework which was built on an analysis of the findings of this research. This is the first such framework, derived from a literature review and empirical study, that has explored the risk factors that lead to failure in implementing ERP systems and which are most important in ensuring success, together with their interrelationships with managers’ groups. Furthermore, risk factors concerning the operation of ERP systems were also incorporated into the research framework. Since the risk factors concerning ERP operation have not been highlighted in other studies, this thesis adds new theoretical insights to the existing literature. Moreover, this thesis not only confirms some of the factors stated in the literature, it also adds several new ones, such as working with two systems (old and new) in parallel, sharing passwords, incorrect entry data, repetition of errors, flowing of errors, illogical processing, and lack of information quality. In addition, groups of managers (such as accounting and financial managers, IT managers and others, who have at least one year or more ERP expertise) are important considerations and need more attention. The research framework of this thesis shows that the perception of ERP risk factors varied among those managerial groups and highlights the influence of managers’ groups regarding their perceptions of these risk factors, as well as identifying which factors were the most important.