Competitive Constructs of ERP Implementation in Public Sector in Pakistan

COMPETITIVE CONSTRUCTS OF
ERP IMPLEENTATION
IN PUBLIC SECTOR IN PAKISTAN
Syed Nayyer Abbas Kazmi
Assistant Professor
Faculty of Management Sciences
International Islamic University
Sector H-10, Islamabad-Pakistan
nayyer_kazmi@yahoo.com

Abstract
This paper evaluates and operationalizes eight competence constructs in ERP
implementation in Pakistan. Questionnaire base survey is conducted in three
organizations where ERP has been successfully implemented. Data analysis and
interpretation is given on basis of these competitive constructs which were defined by
Jeff K. Stratman and Aleda V. Roth. The role of strategic IT planning, executive and
management commitment, IT skills, business process skills and ERP training and
Learning has been determined in PIFRA, PTCL and NADRA in Pakistan. It was
concluded that top management and project manage plays vital role in successful ERP
implementation. Moreover business process reengineering, data conversion from legacy
system and employees training and learning are the main issues in ERP implementation.
Key Words: Enterprise Resource Planning, ERP Competitive Constructs, Strategic IT
Planning, ERP training and learning

Introduction
According to Delotte Consulting, an ERP system is a packaged business software system
that allows a company to “automate and integrate the majority of its business processes,
share common data and practices across the enterprise, and produce and access
information in a real-time environment” (Mary Sumner, 2007). ERP systems are
programs that provide integrated software to handle multiple corporate functions
including finance, human resources, manufacturing, materials management, and sales and
distributions (T. H. Davenport, 2000). SAP, Peoplesoft, Oracle, JD Edwards and Bann

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 Competitive Constructs of ERP Implementation in Public Sector in Pakistan

are the major ERP vendors. AMR Research depicts that the sales of ERP software were
$180 billion upto 2002 and the ERP market may reach $1 trillion by 2010 (Bingi,
Sharma, and Godla, 1999). Kalakota and Robinson (2001) classified the evaluation of
ERP systems into manufacturing integration enterprise integration, customer-centric
integration and inter-enterprise integration.
The main goal of the ERP is to facilitate information sharing and integration across
varying functions, use technology to develop process standardization across multiple
business users in order to improve efficiency and to provide automated solutions to a
wide range business processes.

Literature Review
ERP applications suites exploit the integrative capacity of the corporate communications
network to link ‘traditional’ business functions like finance, production, warehousing and
sales into a single system employing a shared database (Hirschheim & Klein, 2000). It
eliminates multiple data entry. It enables an organization to share common data and
activities throughout an enterprise, automate and integrate the critical parts of its business
processes and generate and access information in a real-timed environment (Ann Hillary,
Willis-Brown, 2000).
ERP is now considered to be the price of entry for running a business (Jacobs and
Bendoly, 2003; Kumar and Hillegersberg, 2000). After ERP implementation,
organizations are in position to provide better customer services, empower employees
and achieve greater business value. Organizations can also increase efficiency of their
processes, enhance customer responsiveness, reduced operating costs and integrated
decision support information.
Business process reengineering activities are closely related with ERP implementation
and organizations can standardize processes and implement the best practices to ensure
quality (Ross, 1999). Successful ERP implementation effects the new business
environment. ERP benefits valuation can be classified into tangible and intangible
benefits. The nature of benefits attached with ERP is mostly intangible. According to
Remenyi et al. (1993), ‘a tangible benefit is one which directly affects the firm’s
capability’ (Kenneth E Murphy & Steven John Simon). Although ERP benefits are

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 Competitive Constructs of ERP Implementation in Public Sector in Pakistan

difficult to quantify but managers are required to justify projects financially. Some of the
tangible benefits are inventory reduction, personnel reduction, information technology
cost reduction, procurement cost reduction and transportation/logistics cost reduction.
Information visibility, improved processes, customer responsiveness, standardization,
business performance, globalization and integration are some of the intangible benefits
achieved by ERP implementation. CSR wood panel in Australia drastically reduce cost of
inventory up to $37 million and improve process delivery and business functions just
after on year of ERP implementation (Jazz J. Chen, 2001). Based upon a sample of 117
firms in 17 countries, the Conference Board reports that 34% of the companies were
satisfied with ERP, 58% were somewhat satisfied, 7% were somewhat unsatisfied and
only 1% were unsatisfied (McNurlin, 2001).
Though there are many benefits but costs and risk in ERP implementation are also
considerable. Many of the ERP implementations fails due to rely on too heavily on
limited in-house expertise, scare and costly consultants, lack of knowledge, limited
employee training and transfer of legacy data. ERP systems are different from in-house or
custom development system because business processes and procedures have to be
changed, the user need customization to be introduced and the user becomes dependent
on the ERP vendor for assistance and update (Somer and Nelson, 2003; Wu and Wang,
2005).
A study indicates that 40% of all ERP installations only achieve partial implementation
and 20% of attempted ERP adaptation are scrapped as total failure (in jazz j chen, 2000).
Some studies rate ERP failure to 50% (Trunick, EscalLe et al., 1999). According to a
survey, Business Process Reengineering involves major costs and risks in ERP
implementation (43%). Data conversion from previous legacy system (15%), training and
change management (15%), hardware (12%) and software (15%) are other major costs
and risks in ERP implementation (Grant Norris, James Hurley et al., 200). Companies
like Hershey Foods, Nike, A-DEC, and Connecticut General sustained losses running into
hundreds of millions of dollars in some instances (James A. O’Brien, 2000). FoxMeyer, a
pharmaceutical company failed to implement ERP successfully and ultimately field to
bankruptcy. 35% of the ERP projects had been cancelled and over half those
implemented over ran budget (average overrun 180%) or shop floor (average overrun

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 Competitive Constructs of ERP Implementation in Public Sector in Pakistan

200%). According to some research, inappropriate project management has been

responsible for low success rate of ERP implementation (Fergal, Federic, David, 2008).
Jon Beard and Mary Sumner suggest that success and source of ERP competitive
advantage lies in the actual management of ERP projects and their subsequent operations
(Elsevier B.V., 2004).

Research Design
Jeff K. Stratman and Aleda V. Roth (2002) identified strategic IT planning, executive
commitment, project management, IT skills, business process skills, ERP training and
learning and change readiness as major constructs for successful ERP adoption.
Theoretical framework based on these competitive constructs is given below:

Strategic IT Planning
Executive Commitment
Project Management
Successful ERP
IT Skills Adoption
Business Process Skills
ERP Training
Learning

This paper follows these eight constructs to assess success of ERP adoption in PTCL,
NADRA and PIFRA, all located in Islamabad. Pakistan Telecommunication Company
Limited (PTCL) is Pakistan’s largest converged services carrier providing all
telecommunication services from basic voice telephony to data services, internet, video-
conferencing all over the country. PTCL has successfully implemented first phase of SAP
ERP in 6 months with SIEMENS’ consultancy. Project for Improvement in Financial
Reporting and Auditing (PIFRA) was established to build capacity and improve the
accuracy, comprehensiveness and reliability at Federal and Provincial levels thereby
strengthening the financial accountability cycle. PIFRA successfully implemented SAP
ERP in 2006 and now second phase has been planned to be implemented by 2010.
National Database Registration Authority is at final stage of its Oracle ERP

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 Competitive Constructs of ERP Implementation in Public Sector in Pakistan

implementation whereas HR and accounts modules have been successfully implemented.

Questionnaire was developed on the basis of above mentioned constructs. 60
questionnaires were distributed among ERP users at managerial, technical and operation
level, out of which 48 were get filled. There were 40 questions in the questionnaire out of
which 15 were on nominal scale and other 25 were on five point Likert scale.
Data Analysis and Interpretation
After analysis and interpretation of collected questionnaires it was observed that
Efficiency, reliability and speediness were the major advantages after ERP
implementation whereas change management, data conversion, heterogeneity, user’s ERP
training and changed environment were the major issues in PTCL. PTCL was further
interested in online ERP and business intelligence solutions in future. In PIFRA real-time
connection, fully integrated applications, improvement in business processes and user
friendliness were the main advantages whereas transition from traditional cash
accounting to new accounting module, users training, data conversion and software
customization were the main issues. After ERP implementation in NADRA, more
accuracy, reliability and timeliness were observed whereas change management and end
users training were the major issues.

Data Analysis and Interpretation

After complete statistical analysis findings are:

Strategic IT Planning
Almost 50% of responded that only top management is involved in ERP implementation
and strategic level decisions. Whereas 33% responded that employees, technical staff and
consultants were also involved in making ERP decisions.

all of the above

33.3%

Top management

52.1%

Employees
4.2%

Technical staff
8.3%
ERP Consultants

2.1%

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 Competitive Constructs of ERP Implementation in Public Sector in Pakistan

Data Conversion from legacy system

According to 50% of the respondents, it is too difficult to convert data from legacy
system to ERP implementation. Almost 10% restructure new processes and 23% reuse
existing processes. Almost 15% are of the view that data conversion is not a serious
problem.

restructure new proc Missing

2.1%
10.4%

easy to convert

14.6%

hard to convert

50.0%

reuse existing proce

22.9%

Comparatively data conversion was major issue in all the organization relatively more in
PIFRA, then in PTCL and relatively less in NADRA.

Business Processes Efficiency

56% of the users were strongly agreed about the efficiency of improved business
processes after ERP implementation.

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 Competitive Constructs of ERP Implementation in Public Sector in Pakistan

neutral
4.2%

agree

39.6%

strongly agree
56.3%

User Expectations
Almost 23% were exactly satisfied (almost 80%-100%) with the ERP application,
whereas 50% were nearly satisfied.

partially
4.2%

medium
25.0%

exactly

22.9%

near exactly

47.9%

Employees Training and Learning

Employees training programs were conducted relatively more in PIFRA and PTCL as
compared to NADRA.

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 Competitive Constructs of ERP Implementation in Public Sector in Pakistan

ERP Plateform Vs. IT Expertise

The role of IT expertise is important in ERP implementation and maintenance.

Recommendations and Conclusion

It was concluded that:-

1 One of the most critical issue is to convert data from legacy to ERP system.
Almost 51.1% mentioned this.

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 Competitive Constructs of ERP Implementation in Public Sector in Pakistan

2 According to estimates 60.4 % organizations prefer to use SAP.

3 56.3 % strongly agree that efficiency is achieved through proper ERP planning
and implementation.
4 50% of sample indicated importance of employee response towards
organizational decision making
5 According to the estimation 56.3% of the respondents agree towards management
success in order to achieve organization’s targets
6 Almost 52.1% employees agree that top management helps in ERP activities and
aspects.

It was concluded that role of Strategic IT Planning, Executive and Managerial

commitment, IT skills, business process skills, ERP training and learning are very
important in successful ERP implementation. There is a gap between ERP users
experience and skills and there is need to bridge this gap by conducting successful
training for employees. There is a shortage of middle man and skilled consultants who
can evaluate and recommend ERP application for an enterprise. Skills of seasoned project
managers are required for successful ERP implementation.

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 Competitive Constructs of ERP Implementation in Public Sector in Pakistan

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14. www.pifra.gov.pk/27-5-08
15. www.nadra.gov.pk/28-5-08
16. www.ptcl.com.pk/29-5-08

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