Analysis of ERP Critical Failure Factors: A Case Study in an Indonesian Mining Company
Keywords:
ERP (Enterprise Resource Planning), CFF (Critical Failure Factors), TOPSIS, Failure Implementation ERP, Mining Company
Abstract
ERP is a useful application for companies to run day-to-day operations by automating business processes, but the complexity and difficulty of deploying ERP systems causes unanticipated implementation failures. Around 70% of ERP implementation fails to produce expected benefits, and three quarters of these projects fail. This study aims to uncover potential reasons that cause the failure of ERP system adoption using Company XYZ, a mining company as the case. A questionnaire was distributed to its management and employees. TOPSIS approach was used to rank the variables according to their significance in affecting failure of ERP systems implementation. The findings revealed that the two most important critical failure causes for ERP implementation are bad understanding of organization’s business processes and poor business process reengineering. The company needs to conduct a deeper analysis of the existing business processes in the business unit to be able to determine more appropriate business process reengineering for ERP implementation in the future. Companies and academics can utilize the study's findings as a helpful resource to identify the cause of ERP implementations failure
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References
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Xue, Y., Liang, H., Boulton, W. R., and Snyder, C. A. 2005. “ERP Implementation Failures in China: Case Studies with Implications for ERP Vendors,” International Journal of Production Economics (97:3), pp. 279–295. (https://doi.org/10.1016/j.ijpe.2004.07.008).
Al-Mashari, M. 2000. “Constructs of Process Change Management in ERP Context: A Focus on SAP R/3,” in Association for Information Systems AIS Electronic Library (AISeL) . (http://aisel.aisnet.org/amcis2000/113).
Alshamrani, A., and Bahattab, A. 2015. “A Comparison Between Three SDLC Models Waterfall Model, Spiral Model, and Incremental/Iterative Model,” IJCSI International Journal of Computer Science Issues (12:1), pp. 106–111. (www.IJCSI.org).
Amid, A., Moalagh, M., and Zare Ravasan, A. 2012. “Identification and Classification of ERP Critical Failure Factors in Iranian Industries,” Information Systems (37:3), pp. 227–237. (https://doi.org/10.1016/j.is.2011.10.010).
Assari, A., Maheshand, T. M., and Assari, E. 2012. “Role of Public Participation in Sustainability of Historical City: Usage of TOPSIS Method,” Indian Journal of Science and Technology (5:3). (http://www.indjst.orgIndianJ.Sci.Technol.).
Ballı, S., and Korukoğlu, S. 2009. “Operating System Selection Using Fuzzy AHP and TOPSIS Methods,” Mathematical and Computational Applications (14:2), pp. 119–130. (https://doi.org/10.3390/mca14020119).
Chakravorty, S. S., Dulaney, R. E., and Franza, R. M. 2016. “ERP Implementation Failures: A Case Study and Analysis,” Int. J. Business Information Systems (21:4), Production and Operations Management, pp. 462–476.
Elragal, A., and Haddara, M. 2013. “The Impact of ERP Partnership Formation Regulations on the Failure of ERP Implementations,” Procedia Technology (9), pp. 527–535. (https://doi.org/10.1016/j.protcy.2013.12.059).
Gargeya, V. B., and Brady, C. 2005. “Success and Failure Factors of Adopting SAP in ERP System Implementation,” Business Process Management Journal (11:5), pp. 501–516. (https://doi.org/10.1108/14637150510619858).
Ghayas, M. M., Hussain, S., Hussain, A., and Islam, N. E. 2022. “Critical Success Factors of ERP Implementation: Evidence from Manufacturing Sector of Karachi,” Journal of Independent Studies and Research Computing (20:2). (https://doi.org/10.31645/JISRC.22.20.2.10).
Griffith, T. L. 1999. “Why New Technologies Fail: Overcoming the Invisibility of Implementation.” (https://www.researchgate.net/publication/275652780).
Hong, K.-K., and Kim, Y.-G. 2002. “The Critical Success Factors for ERP Implementation: An Organizational Fit Perspective,” Information & Management (40:1), pp. 25–40. (https://doi.org/10.1016/S0378-7206(01)00134-3).
Huang, Chiu, Chao, and Arniati. 2019. “Critical Success Factors in Implementing Enterprise Resource Planning Systems for Sustainable Corporations,” Sustainability (11:23), p. 6785. (https://doi.org/10.3390/su11236785).
Hwang, C.-L., and Masud, A. S. Md. 1979. Multiple Objective Decision Making — Methods and Applications, (Vol. 164), Berlin, Heidelberg: Springer Berlin Heidelberg. (https://doi.org/10.1007/978-3-642-45511-7).
Jamil, M. Y., and Qayyum, R. 2019. “Enterprise Resource Planning (ERP) Implementation on Pakistani Enterprises: Critical Success Factors and Challenges,” Journal of Management and Research (2:2), pp. 1–35. (https://doi.org/10.29145/jmr/22/0202004).
Kramer, M. 2018. “Best Practices in Systems Development Lifecycle: An Analyses Based on the Waterfall Model Cryptocurrency View Project.” (https://www.researchgate.net/publication/328770195).
Kumar, A., and Gupta, P. C. 2012. “Identification and Analysis of Failure Attributes for an ERP System,” Procedia - Social and Behavioral Sciences (65), Elsevier BV, pp. 986–991. (https://doi.org/10.1016/j.sbspro.2012.11.231).
Kumar, V., Maheshwari, B., and Kumar, U. 2003. “An Investigation of Critical Management Issues in ERP Implementation: Emperical Evidence from Canadian Organizations,” Technovation (23:10), pp. 793–807. (https://doi.org/10.1016/S0166-4972(02)00015-9).
Kumar Yadav, S., Joseph, Dennis, Yadav, S., and Joseph, D. 2020. “Prioritising Critical Failure Factors for the Adoption of ERP System Using TOPSIS Method,” Int. J. Operational Research (39:2), pp. 145–159.
Malaurent, J., and Avison, D. 2015. “From an Apparent Failure to a Success Story: ERP in China - Post Implementation,” International Journal of Information Management (35:5), Elsevier Ltd, pp. 643–646. (https://doi.org/10.1016/j.ijinfomgt.2015.06.004).
Matende, S., and Ogao, P. 2013. “Enterprise Resource Planning (ERP) System Implementation: A Case for User Participation,” Procedia Technology (9), pp. 518–526. (https://doi.org/10.1016/j.protcy.2013.12.058).
Motiwalla, L. F., and Thompson, J. 2012. Enterprise Systems for Management, (Second Edition.).
Pan, G., Hackney, R., and Pan, S. L. 2008. “Information Systems Implementation Failure: Insights from Prism,” International Journal of Information Management (28:4), pp. 259–269. (https://doi.org/10.1016/j.ijinfomgt.2007.07.001).
Peci, M., and Važan, P. 2014. “The Biggest Critical Failure Factors in ERP Implementation,” Applied Mechanics and Materials (519–520), Trans Tech Publications, Ltd., pp. 1478–1482. (https://doi.org/10.4028/www.scientific.net/amm.519-520.1478).
Prasetyo, S. J., Lubis, M., Witjaksono, R. W., and Azizah, A. H. 2019. “Critical Failure Factors in Enterprise Resource Planning (ERP) Implementation: Case Study of PT.Toyota Astra Motor Indonesia,” in Fourth International Conference on Informatics and Computing (ICIC).
Ravasan, A. Z., and Mansouri, T. 2014. “A FCM-Based Dynamic Modeling of ERP Implementation Critical Failure Factors,” International Journal of Enterprise Information Systems (10:1), IGI Global, pp. 32–52. (https://doi.org/10.4018/ijeis.2014010103).
Umble, E. J., Haft, R. R., and Umble, M. M. 2003. “Enterprise Resource Planning: Implementation Procedures and Critical Success Factors,” European Journal of Operational Research (146:2), pp. 241–257. (https://doi.org/10.1016/S0377-2217(02)00547-7).
Visalakshmi, S., Lakshmi, P., Shama, M. S., and Vijayakumar, K. 2015. “An Integrated Fuzzy DEMATEL-TOPSIS Approach for Financial Performance Evaluation of GREENEX Industries,” International Journal of Operational Research (23:3), p. 340. (https://doi.org/10.1504/IJOR.2015.069626).
Wong, A., Scarbrough, H., Chau, P., Davison, R., Wong, A. ;, Scarbrough, H. ;, Chau, P. ;, and Chau, P. Y. K. 2005. “Critical Failure Factors in ERP Implementation,” (Vol. 40). (http://aisel.aisnet.org/pacis2005/40).
Xue, Y., Liang, H., Boulton, W. R., and Snyder, C. A. 2005. “ERP Implementation Failures in China: Case Studies with Implications for ERP Vendors,” International Journal of Production Economics (97:3), pp. 279–295. (https://doi.org/10.1016/j.ijpe.2004.07.008).
Published
2023-10-11
How to Cite
Larasati, S. D., Eitiveni, I., & Mahardhika, P. (2023). Analysis of ERP Critical Failure Factors: A Case Study in an Indonesian Mining Company. Jurnal Sistem Informasi, 19(2), 34-47. https://doi.org/10.21609/jsi.v19i2.1291
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Articles
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