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Factors affecting ERP system

implementation effectiveness

Article in Journal of Enterprise Information Management · January 2012

DOI: 10.1108/17410391211192161 · Source: DBLP

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 Journal of Enterprise Information Management
Factors affecting ERP system implementation effectiveness
Dimitrios Maditinos Dimitrios Chatzoudes Charalampos Tsairidis
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implementation effectiveness", Journal of Enterprise Information Management, Vol. 25 Iss 1 pp. 60 - 78

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JEIM
25,1
60
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Received 27 August 2010
Revised 27 September 2010
Accepted 23 March 2011
Journal of Enterprise Information
Management
Vol. 25 No. 1, 2012
pp. 60-78
q Emerald Group Publishing Limited
1741-0398
DOI 10.1108/17410391211192161
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/1741-0398.htm
Factors affecting ERP system
implementation effectiveness
Dimitrios Maditinos
Department of Business Administration,
Technological Educational Institute of Kavala, Kavala, Greece
Dimitrios Chatzoudes
Department of Production and Management Engineering,
Democritus University of Thrace, Xanthi, Greece, and
Charalampos Tsairidis
Department of Social Administration, Democritus University of Thrace,
Komotini, Greece
Abstract
Purpose – Enterprise resource planning (ERP) systems enhance productivity and working quality
by offering integration, standardization and simplification of multiple business transactions. The
present study seeks to introduce a conceptual framework that investigates the way that human inputs
(top management, users, external consultants) are linked to communication effectiveness, conflict
resolution and knowledge transfer in the ERP consulting process, as well as the effects of these factors
on ERP system effective implementation.
Design/methodology/approach – The examination of the proposed conceptual framework was
made with the use of a newly developed questionnaire. The questionnaire was distributed to a group of
361 Greek companies that have implemented an ERP system. Information technology (IT) managers
were selected as the key respondents of the questionnaire. After the completion of the four month
research period (September to December 2008), 108 usable questionnaires were returned (response
rate ¼ 31 percent approximately). The empirical data were analyzed using the structural equation
modelling technique (Lisrel 8.74).
Findings – The main findings of the empirical study can be summarized in the following categories:
the assistance provided by external consultants during the ERP implementation process is essential;
knowledge transfer is an extremely significant factor for ERP system success; knowledge transfer
concerning technical aspects of ERP systems is more important than effective handling of
communication, as well as conflict resolution among organizational members; the role of top
management support seems to be of less importance that the one provided by users.
Research limitations/implications – The present study is limited by the poor definition of its
population (due to lack of available data) and the relatively small size of the sample.
Practical implications – The paper points out areas that adopting companies should emphasize in
order to successfully implement an ERP system and, therefore, harvest its potential benefits.
Originality/value – The paper proposes an enhanced conceptual framework that examines vital
issues concerning ERP system effective implementation, thus, providing valuable outcomes for
decision makers and academics. The originality of the paper lies in its three dimensional
approach.
Keywords Enterprise resource planning, Internal support, External support,
ERP system effective implementation, Linear structure equation modelling, Cost effectiveness,
Resource efficiency
Paper type Research paper
 1. Introduction Factors affecting
Individuals, companies and managers often face difficulties in comprehending the full effectiveness
spectrum of capabilities and attributes of ERP systems, due to the system’s
complicated nature (Finney and Corbett, 2007; Markus and Tanis, 2000; Somers and
Nelson, 2004). Marnewick and Labuschagne (2005) argue that an ERP system should
not only be regarded as an information system (IS), but also, in order to be effectively
implemented should be regarded as an integrated business system that surrounds all 61
business functions. The same scientists define ERP as a software package that
combines both business processes and information technology (IT) features.
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Nowadays, ERP systems are being increasingly adopted by organizations of any

kind and size, in order to avoid technical obsolesce and create sustainable competitive
advantages (Al-Mashari et al., 2003; Willis and Willis-Brown, 2002). Dillard and Yuthas
(2006) note that most multinational firms are using ERP software packages and even
more small and midsize companies are on the route of adopting them.
ERP system acquisition and implementation generally enhance productivity and
working quality, since the system offers standardization and simplification in multiple,
complicated operational procedures across the company (Nah et al., 2001). Moreover,
information can easily be transferred, shared and exchanged among users who are
working at different business divisions (Amoako-Gyampah, 2007; Kemp and Low,
2008). In general, the literature has identified the following potential benefits of ERP
system implementation (Al-Mashari et al., 2003; Amoako-Gyampah, 2007; Chang, 2004;
King, 2005; Scott and Kaindl, 2000; Umble et al., 2003):
.
improved coordination across functional departments;
.
increased efficiency in doing business;
.
reduced operating costs (lower inventory control cost, lower production costs,
lower marketing costs, lower help desk support costs);
.
facilitation of day-to-day management;
.
rapid access to information for decision making and managerial control; and
.
support of strategic planning (through the planning of available resources).

Despite the attributes and major advantages provided by ERP systems, the
implementation of such systems is not always effective. Most enterprises are not able
to fully justify their investments in ERP software, since the bulk of ERP benefits
remain hidden. In their survey, Marnewick and Labuschagne (2005) reported that 25
percent of ERP installations exceed the initial cost and about 20 percent cannot be
completed. Moreover, ERP systems often fail to meet organizational goals soon after
their implementation. The cause of the general disappointment regarding ERP system
effectiveness lies in a number of reasons, including a misconception about the system’s
potential (Bradford and Florin, 2003; Hong and Kim, 2002; Marnewick and
Labuschagne, 2005; Motwani et al., 2005).
The present study aims to develop a conceptual framework that incorporates the
main factors leading in the effective implementation of an ERP system. Motivated by
the theoretical importance of ERP systems and the empirical failure in fully harvesting
their potential, the proposed conceptual framework includes variables that, according
to the best of our knowledge, have never been collectively examined before.
 JEIM Built on the argument that the success of most ERP systems is decided during the
25,1 initial steps of their implementation (Gargeya and Brady, 2005; Hong and Kim, 2002)
and significantly depends on the cooperation with an external consulting group
(Akkermans and van Helden, 2002), the present study develops an “ERP
implementation process model” that investigates the impact of internal and external
human inputs on ERP implementation effectiveness (see Figure 1).
62 The need to fully incorporate the role of external consulting support in the proposed
conceptual framework is imposed by its wide accepted significance in the ERP
implementation process (Wang and Chen, 2006). On the other hand, the influence of
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internal stakeholders (top management and users) in the ERP consulting process is
equally important, since they are the ones that must understand and learn to use what

Figure 1.
ERP implementation
process model
 is embedded in the system. By including both internal and external support, the Factors affecting
present paper takes account of all the critical entities that could significantly impact effectiveness
the process and outcome of an ERP system implementation (Reimers, 2003).
More analytically, the proposed “ERP implementation process model” investigates
whether external and internal human inputs affect the consulting implementation
process related to effective communication, conflict resolution and knowledge transfer
and whether these factors lead to ERP system effective implementation. Such an 63
integrative approach has never been attempted in the literature before and is expected
to yield significant findings for companies that are about to adopt ERP systems. In
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general, it is argued that the proposed conceptual framework adopts a holistic

approach to ERP system implementation, sheds light in areas rarely investigated and
leads to interesting practical implications.
The present study makes two contributions to the ERP implementation literature.
First, it develops a conceptual framework that places the centre of attention on the ERP
consulting process, arguing that the success of most ERP systems is decided upon their
initial implementation and depends significantly on external consultation. Second, the
study highlights the contribution of “people” (top management, users, external
consultants) to the process of ERP implementation, based on the concept that most
ERP systems, however how intelligent, need to be thoroughly adjusted to every
business environment in order to be crystallized into workable ERP solutions.
The following section includes the presentation of the proposed conceptual
framework of the study. In the third and fourth section, the research methodology and
the results are being presented. The conclusions and the impact of the research are
discussed in sections 5 and 6 respectively and, finally, section 7 includes study
limitations and proposals for future research.

2. The conceptual framework of the study

The present study introduces a newly developed conceptual framework that places the
ERP consulting process on the center of attention. According to Wang and Chen (2006,
p. 1031), “one key to a successful ERP implementation is to maintain an effective and
smooth consulting process”. The proposed “ERP implementation process model”
consists of three dimensions (see Figure 1): human inputs; ERP consulting process; and
consequence. The human input dimension includes variables about internal and
external support; the ERP consulting process dimension includes variables that are
likely to affect the ERP consulting process; while the consequence is the effectiveness
of the implemented ERP, as it is perceived by its actual users.
The aim of the study is to examine the causal relationships between seven research
variables that belong to these three dimensions:
(1) top management support (human input . internal support);
(2) user support (human input . internal support);
(3) consultant support (human input . external support);
(4) communication effectiveness (ERP consulting process);
(5) conflict resolution (ERP consulting process);
(6) knowledge transfer (ERP consulting process); and
(7) ERP system effective implementation (consequence).
 JEIM The proposed conceptual framework is based on previous studies by Wang and Chen
25,1 (2006), Wang et al. (2007) and Thong (2001). The hypotheses of the study are presented
below.

2.1 ERP consulting process

The consulting process that takes place during and after the implementation of an ERP
64 system is of vital significance for every company (Wang and Chen, 2006). The
following paragraphs discuss the three main factors that relate to the ERP consulting
process: communication effectiveness (Bloomfield and Danieli, 1995; Wang and Chen,
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2006); conflict resolution (King, 2005; Robey et al., 1993; Wang and Chen, 2006); and
knowledge transfer (Wang et al., 2007), as well as their effect on ERP system effective
implementation.
2.1.1 Communication effectiveness. Effective communication is a strong foundation
of a trustworthy relationship between external consultants and organizational
members (Attewell, 1992). The more consultants and users understand each other, the
more effective the communication becomes during the consulting process. Insufficient
communication of users’ needs, goals and aspirations to the consultants may
undermine the implementation of the ERP system (Fleck, 1993; Wang and Chen, 2006).
Thus, we hypothesize that:
H1. A positive relationship exists between communication effectiveness and ERP
system effective implementation.
The consulting process is an undertaking that, in order to be effective, constant
communication with the client is needed (Lee and Kim, 1999). With effective
communication, information can be transferred and exchanged easier between both
parties who realize, in that way, that sustaining this relationship is at their best
interest. Such relationship, accordingly, generates trust between the client company
and the consultant company. As a result, the two companies become allies in a common
effort to minimize conflicts that may arise in their cooperation (Lee and Kim, 1999;
Morgan and Hunt, 1994; Wang and Chen, 2006). Thus, we hypothesize that:
H2. A positive relationship exists between communication effectiveness and
conflict resolution.
2.1.2 Conflict resolution. The implementation of an ERP system is a time-consuming
process. During that process certain conflicts may occur between users and consultants
(King, 2005). Such conflicts will possibly affect in an adverse way the output of the
consultant-client relationship (McGivern, 1983). However, the emergence of
disagreements during the implementation period should not be considered as a
negative turn in the cooperation, but rather as a common incident during a long-lasting
collaboration (Green, 1998). Effective management of conflicts may lead in an enhanced
level of information exchange and group work, thus, improving the implementation of
the ERP system (Scott and Kaindl, 2000). Thus, we hypothesize that:
H3. A positive relationship exists between conflict resolution and ERP system
effective implementation.
2.1.3 Knowledge transfer. Knowledge transfer in the ERP consulting process can be
described as a gradual procedure in which knowledge is being transferred from
 external consultants and vendors to the internal environment of the company (Wang Factors affecting
et al., 2007). An increased level of knowledge concerning the ERP system will enable
the company to exploit the new technology to its full potential and continue to achieve
effectiveness
benefits from the use of the system in the future. Thus, we hypothesize that:
H4. A positive relationship exists between knowledge transfer and ERP system
effective implementation.
65
2.2 External consultant support
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Consultants play a major part in the ERP implementation challenge, since they have
the technical knowledge and expertise to assist users in filling the unavoidable
knowledge gab that derives from implementing a new ERP system. Under that logic,
the consulting process becomes a necessity for any company that is willing to
implement an ERP system (Freeman and Dart, 1993; Wang and Chen, 2006). The
solutions that consultants offer during and after the configuration of the ERP system
directly influence the effectiveness of the implemented ERP, independent of their
interactions with their client (Wang and Chen, 2006). Thus, we hypothesize that:
H5. A positive relationship exists between consultant support and ERP system
effective implementation.
In order to achieve high-level communication with each client and be able to resolve
conflicts that may probably arise, a consultant should be particularly skilled
(McLachlin, 1999). A successful consultant possesses both sufficient technical
background, as well as the ability to communicate knowledge and experience, in a way
that he gains the client’s trust (McGivern, 1983; Wang and Chen, 2006). Only in such a
case, the client feels safe and, as a consequence, a good level of communication and an
effective negotiation procedure during the whole implementation process is achieved
(Wang and Chen, 2006). Therefore, we hypothesize that:
H6. A positive relationship exists between consultant support and communication
effectiveness.
H7. A positive relationship exists between consultant support and conflict resolution.
ERP systems are complex in their nature, as well as in their implementation. Therefore,
each company must acquire the adequate know-how and understanding of the system
in order to fully exploit its potential. Consultant support from specialists who know in
detail the ERP system and have the experience of how the system operates is crucial in
order to achieve the required knowledge transfer to the company. The more extended
the consultant support is, the more successful the transfer of knowledge to the
adopting company will be (Bessant and Rush, 1995; Wang et al., 2007). Therefore, we
hypothesize that:
H8. A positive relationship exists between consultant support and knowledge
transfer.

2.3 Internal consultant support

However competent a consultant may be, ERP implementation will not run smoothly
unless the members of the client organization (top management and users) are
committed to the adoption and the use of the ERP system (Wang and Chen, 2006).
 JEIM 2.3.1 Top management support. Top management support describes the extent to
25,1 which executive managers of the adopting firm provide the attention, resources, and
authority required for ERP implementation (Wang and Chen, 2006). Top management
support is a prerequisite for the successful ERP system implementation. Top managers
supervise the whole implementation procedure, enable resource distribution, and
support conflict management (Wang and Chen, 2006). Moreover, top management has
66 the responsibility to align the new ERP system with the current business practices and
prepare the employees for the change brought by the new technology. When top
management works closely with various ERP users in the direction of the successful
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implementation of the ERP system, the communication between business groups is

being enhanced and conflict resolution becomes attainable (Thong et al., 1996; Thong,
2001). Thus, we hypothesize that:
H9. A positive relationship exists between top management support and
communication effectiveness.
H10. A positive relationship exists between top management support and conflict
resolution.
Moreover, we hypothesize that a strong support from the top management towards the
implemented ERP system will lead to enhanced knowledge transfer inside the adopting
organization (Boynton et al., 1994; Cohen and Levinthal, 1990):
H11. A positive relationship exists between top management support and
knowledge transfer.
2.3.2 User support. User support refers to the psychological state of business users
toward the changes caused by the implemented ERP system, as well as toward the use
of the system for performing their tasks (Wang and Chen, 2006). The users of an ERP
system are usually the ones required to adjust their daily working practices to the new
system’s requirements. Apparently, becoming familiar with a new ERP system is not
an easy task and involves hard working and patience from the part of users
(McLachlin, 1999; Soh et al., 2000; Wang and Chen, 2006).
In order to favorably affect users’ perceptions about new technology, the real benefits
and advantages of using the ERP system need to be continuously reminded (Umble et al.,
2003). Otherwise, users are not motivated to support the ERP system in that they are not
willing to cooperate with the consultants and assimilate the knowledge transferred to
them. This situation provokes conflicts in the consultant-client relationship and hinders
communication (Wang and Chen, 2006). Therefore, we hypothesize that a high degree of
user support will strengthen communication effectiveness and conflict resolution:
H12. A positive relationship exists between user support and communication
effectiveness.
H13. A positive relationship exists between user support and conflict resolution.
Finally, we hypothesize, with alignment to H11, that a strong user support towards the
implemented ERP system will lead to enhanced knowledge transfer inside the adopting
organization (Boynton et al., 1994; Cohen and Levinthal, 1990):
H14. A positive relationship exists between user support and knowledge transfer.
 Figure 1 summarizes all the above hypotheses, thus, presenting the proposed Factors affecting
conceptual framework of the study. effectiveness
3. Research methodology
3.1 Sample of the study
The conceptual framework of the present study was tested with the use of a newly
developed questionnaire on a sample of Greek companies that have implemented an 67
ERP system. Data concerning companies that could possibly be included in the sample
of the study were obtained via the web sites of the leading ERP system providers that
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operate in Greece (e.g. Sap Hellas, Oracle Hellas, Synergy Hellas). Since no other
database including companies using ERP systems exists, the use of the certain method
was the only one able to provide usable information. Totally, 517 companies that have
implemented an ERP system were identified.

3.2 Measures
The questionnaire of the present study is based on items (questions) that have been
used by various previous researchers (Davison, 1997; Freeman and Dart, 1993; Jiang
et al., 2000; Lee and Kim, 1992; Shin and Lee, 1996; Simonin, 1999; Sussman and
Guinan, 1999; Wang and Chen, 2006; Wang et al., 2007). All questions were translated
to Greek and then back to English by another person, so the detection and consequent
improvement of any discrepancies was possible. The five-point Likert scale was used
for the measurement of all variables (1 ¼ “strongly disagree” to 5 ¼ “strongly agree”).
Table I demonstrates the seven research variables, the number of items used for their
measurement and the studies from which they where adapted.

3.3 Data collection

The final questionnaire and a cover letter including all necessary clarifications, was
sent to the IT managers of the companies of the sample. IT managers were selected as
the key respondents, due to their experience and expertise. Questionnaires were sent
only after telephonic contact with the IT manager in each company has been
established. In order to send the questionnaire and the necessary clarifications to the
person contacted by telephone, fax, traditional mail, or electronic mail services were
utilized.
After making all necessary telephone calls, 361 questionnaires were distributed to
361 companies that agreed to participate in the survey. The research period lasted four

Variables Number of items Adapted from

Top management support 7 Lee and Kim (1992)

User support 6 Jiang et al. (2000)
Consultant support 10 Freeman and Dart (1993)
Communication effectiveness 4 Davison (1997)
Conflict resolution 4 Sussman and Guinan (1999)
Knowledge transfer 4 Simonin (1999), Wang et al. (2007) Table I.
ERP effective implementation 5 Shin and Lee (1996) The measurement of the
Total 40 variables of the study
 JEIM months (September to December 2008). Totally, 112 questionnaires were returned, and
25,1 after realizing all necessary controls 108 were used for data analysis (data analysis was
conducted with the use of the statistical packages SPSS 14.0 and Lisrel 8.74). The 112
returned questionnaires represent a very satisfactory response rate of 31 percent.
The majority (24.7 percent) of the companies of the sample belong to the “Informatics”
industry (sector), while 14.8 percent to the “Electronic” and 12.3 percent to the “Food”
68 industry. Moreover, the 37 percent of the companies of the sample employ 101 to 500
employees, 30.9 percent employ 51 to 100 employees, while only 6.2 percent and 12.3
percent of the companies employ less that 50 and more that 1,000 employees
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respectively. Accordingly, the results indicate that the annual sales of the 32.1 percent of
the companies of the sample are between 10,000,000 and 50,000,000 Euros, while the
second larger category (29.6 percent) includes companies that have annual sales between
1,000,000 and 10,000,000 Euros. The majority of the respondent companies (34.6 percent)
have been using an ERP system for more than two years, 29.6 percent less than two
years and 35.8 percent less that one year. Finally, about half of the Greek companies of
the sample (49.6 percent) have chosen “SAP Ltd” as their ERP system provider, 26.7
percent “Oracle Ltd” and 23,7 percent have chosen another supplier.

3.4 Reliability and validity

The instrument (questionnaire) that was used in the present study was tested for both
its content and construct validity. The control for the content validity was conducted
prior to the beginning of the survey and included consultation with academics of the
field, consultation with experienced practitioners, and pilot testing.
The control for the construct validity was conducted in two steps. Each of the seven
research variables was evaluated for its unidimensionality and reliability, for the
goodness of fit to the proposed research model.
The estimation of the unidimensionality of each of the seven variables was
conducted using explanatory factor analysis with the method of principal component
analysis. Moreover, for the estimation of the reliability of the research variables, the
statistical measure Cronbach’s alpha was used (the statistical package SPSS was used
in both cases).
All tests concluded that all the scales used, after minor amendments (extraction of
items), are valid and reliable (see Table II for the main results).
Furthermore, the evaluation of the goodness of fit of each of the seven research
variables to the proposed model was conducted using confirmatory factor analysis,
with the use of the statistical package LISREL 8.71.
All tests conducted produced satisfactory results (see Table III for the main results
concerning the estimation of the goodness of fit). Finally, after the successful
completion of the control for the construct validity of the questionnaire, the final score
of each variable was calculated using the mean of the items used in each case.

4. Results
The conceptual framework of the present study suggests that top management
support, user support and consultant support are positively related with ERP system
effective implementation, through communication effectiveness, conflict resolution and
knowledge transfer (see Figure 1). The examination of the conceptual framework and
the verification of the 14 hypotheses were conducted with the use of the “structural
 Factors affecting
Kaiser- Bartlett’s test Cronbach
Variables Mayer-Olkin of sphericity Eigenvalue Variance alpha effectiveness
Top management
support 0.691 144.9 * 2.656 77.31% 0.846
User support 0.716 169.5 * 3.003 79.63% 0.894
Consultant support 0.663 91.9 * 2.013 66.34% 0.736 69
Communication
effectiveness 0.763 163.2 * 2.520 63.85% 0.766
96.3 *
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Conflict resolution 0.712 2.112 58.58 0.736

Knowledge transfer 0.836 23.3 * 2.963 75.09 0.891
ERP system effective Table II.
implementation 0.779 163.3 * 2.367 76.84 0.821 Estimation of
unidimensionality and
Note: *p , 0:01 reliability

VE
Variables X2 CR (%) RMSEA CFI GFI

Top management support 37.71 * 0.81 63 0.0967 0.97 0.98

User support 13.58 * 0.83 68 0.097 0.99 0.99
Consultant support 21.66 * 0.73 56 0.095 0.96 0.99
Communication effectiveness 13.23 * 0.89 64 0.096 0.99 0.97
Conflict resolution 19.49 * 0.91 78 0.097 0.96 0.99
Knowledge transfer 9.69 * 0.87 64 0.086 0.96 0.99
ERP system effective implementation 25.32 * 0.86 73 0.099 0.97 0.97 Table III.
Estimation of the
Note: *p , 0:05 goodness of fit

equation modeling technique”. the certain multivariate technique was used because of
its ability to simultaneously examine a number of depended linear relations, where one
or more construct (variable) is both dependent and independent according to the
relation it belongs (Hair et al., 1995; Kelloway, 1998). For the conduction of the
appropriate analysis the statistical package LISREL 8.74 was used.
The estimation of the structural model was conducted with the maximum likelihood
estimation method, which is the most widespread method of estimation (Anderson and
Gerbing, 1988; Kelloway, 1998). The covariance matrix was used as the table of entry,
because the control of the hypotheses in the structural equation modeling technique is
based on the hypothesis that the matrix that will be analyzed is the covariance matrix.
Thus, even though the use of the correlation matrix has widespread use in a lot of
applications, the use of the covariance matrix is recommended (Kelloway, 1996).
Finally, the extraction of the standardized completely solution was requested.
To evaluate the fit of the overall model the chi-square value (X 2 ¼ 712:69 with 447
degrees of freedom) and the p-value (p ¼ 0:05060) were estimated. These values
indicate a good fit of the data to the overall model. However, the sensitivity of the X 2
statistic to the sample size enforces to control other supplementary measures of
evaluating the overall model, such as the “Normed-X 2” index (1.59), the RSMEA index
(0.087) the CFI (0.95) and the GFI (0.93), that all indicate a very good fit. For the control
 JEIM of the measurement model the significance of the factor loadings, the construct
25,1 reliability and the variance extracted were estimated. Results indicated that all
loadings are significant at the p , 0:05 level. Additionally, the construct reliability and
the variance extracted measures for all constructs are satisfactory.
Table IV illustrates all relations between research variables, as they have been
determined by the hypotheses of the study (see paragraph 2). For the verification (or
70 the rejection) of every research hypothesis, two controls have been conducted: the value
and the direction of the relation between the two latent variables; and the significance
of the relation, indicated by the t-value, were examined. According to Hair et al. (1995),
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when the t-value is above 1.96 and below 2 1.96, the hypothesis is significant at the
significance level of 5 percent. Otherwise, the hypothesis is statistically insignificant.
Results offer support to 8 research hypotheses (H2, H4, H5, H7, H8, H10, H12,
H14), while six hypotheses are not verified by the empirical data (H1, H3, H6, H9,
H11, H13). The analysis of the results gives room for interesting observations and
offers guidelines to ERP implementing companies.

4.1 General observations

In general, it should be highlighted that the empirical results suggest that only
knowledge transfer and consultant support can directly and positively influence ERP
effective implementation (H4 and H5), while the postulated effect of communication
effectiveness and conflict resolution is insignificant (H1 and H3). Between these two
significant paths, consultant support seems to be of greater importance that knowledge
transfer (0.41 and 0.25 respectively).

4.2 “ERP consulting process” dimension

The only variable of the “ERP consulting process” dimension that has a direct positive
impact on ERP effective implementation is knowledge transfer (H4). Results failed to

Hypothesis Path Effect t-value Result

H1 Communication effectiveness ! ERP system 2 0.76 21.46 Rejected

effective implementation
H2 Communication effectiveness ! conflict resolution 0.73 3.09 Accepted
H3 Conflict resolution ! ERP system effective 1.20 1.90 Rejected
implementation
H4 Knowledge transfer ! ERP system effective 0.25 2.36 Accepted
implementation
H5 Consultant support ! ERP system effective 0.41 2.46 Accepted
implementation
H6 Consultant support ! communication effectiveness 2 0.09 20.71 Rejected
H7 Consultant support ! conflict resolution 0.49 3.26 Accepted
H8 Consultant support ! knowledge transfer 0.22 2.35 Accepted
H9 Top management support ! communication 2 0.28 22.00 Rejected
effectiveness
H10 Top management support ! conflict resolution 0.19 1.99 Accepted
Table IV. H11 Top management support ! knowledge transfer 0.01 0.14 Rejected
Direct effects between H12 User support ! communication effectiveness 0.53 3.53 Accepted
research variables (test of H13 User support ! conflict resolution 0.04 0.29 Rejected
hypotheses) H14 User support ! knowledge transfer 0.22 2.46 Accepted
 establish a significant relationship between communication effectiveness and conflict Factors affecting
resolution, on the one hand and ERP system effective implementation on the other (H1 effectiveness
and H3). It seems that these two variables do not have the capacity to directly influence
the outcome of the ERP implementation process, mostly because they are not as
equally significant as knowledge transfer and consultant support. They may be
necessary for maintaining a good working environment while the implementation
process takes place, but they fail to directly influence the overall success of this 71
process.
Moreover, communication effectiveness has a quite large effect (0.73) on conflict
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resolution (H2). This is quite logical, since the higher the communication between
business entities, the better the possibility to resolve the problems that occur during
the implementation of an ERP system.

4.3 “Human input” dimension

User support is the only variable of the “human input” dimension that has an influence
on communication effectiveness (H12). This finding indicates that the willingness of
users to support the project and accept the corresponding organizational changes
motivates them to openly express themselves regarding their thoughts and
requirements during the implementation process.
Moreover, both consultant support and top management support are positively
associated with conflict resolution (H7, H10). Consultants can enhance the ERP
implementation process by facilitating conflict resolution, thus, reducing the
occurrence of persistent conflicts. Top management support is also critical to
inter-unit conflict resolution, since top managers are responsible for coordinating the
various business departments and provide compulsory guidelines and instructions.
Finally, it is found that user and consultant support influence knowledge transfer
(H8, H14) with the same intensity (0.22). The support of users and consultants during
the implementation period leads in higher levels of knowledge transfer, meaning that
the organization absorbs more knowledge about the use of the system, the knowledge
gap between users and consultants is eliminated and, thus, the ERP implementation
better satisfies the requirements of the company. This finding is very important, since
knowledge transfer is one of the two research variables that have a direct impact on
effective ERP implementation. Hence, it is supported that user and consultant support
have an indirect impact on ERP system effective implementation, an impact that is
mediated through knowledge transfer.
Figure 2 presents the revised form of the proposed conceptual framework, in which
only the significant paths are shown.

5. Conclusions
The present study has proposed a conceptual framework that investigates the main
factors leading in the effective implementation of an ERP system. To the best of our
knowledge, it is the first empirical evidence that demonstrates the relationship between
human inputs, variables that are connected with the ERP implementation process and
the final outcome of this process. The examination of the conceptual framework was
made with the use of a newly developed structured questionnaire and the results offer
interesting implications to ERP adopting companies. The presentation of the
 JEIM
25,1

72
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Figure 2.
ERP implementation
process model – results

conclusions follows a structured path, so as to enhance their clarity and avoid any
possible misinterpretation.

5.1. Consultant support

The study empirically shows that the support of external consultants is crucial for the
effective implementation of ERP systems. The assistance provided by external
consultants is essential, even more important than that provided by top managers. The
contribution of the consultants’ involvement and support in the implementation
process has also been verified in the studies of Wang and Chen (2006), Chang (2004)
and Finney and Corbett (2007).
Since consultant support is a factor with such a significant influence on ERP system
effective implementation, companies should focus on hiring the right consultant group
for the specific business environment. Efforts towards consultant selection should not
be viewed as a time wasting procedure, since the experience of consultants in similar
business contexts, the commitment towards achieving mutual goals and the shared
mentality of the two contactors are of crucial importance for successful
implementation.
Consultants should not only acquire technical skills, but should also have a broad
understanding of the individual business practices and a genuine commitment towards
resolving every-day issues considering ERP system implementation. It would be
 advisable for adopting companies to make a contractual connection between the fees Factors affecting
paid to the consultant team and the improvement in certain areas of business activity. effectiveness
In general, the consultant group should be viewed as a valuable “ally” in the ERP
implementation process: consultants need the support and the acceptance of the
company personnel in order to be able to fully integrate their valuable expertise and
make a substantial difference in the implementation of ERPs. If system users adopt a
negative attitude towards working together with a professional team of consultants, 73
the implementation procedure will surely produce poor results.
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5.2 Knowledge transfer

The present survey has statistically indicated that knowledge transfer is a significant
factor for ERP system success. On the same vain, the study of Wang et al. (2007) has
produced the same results. On the other hand, no significant relationship was found
between communication effectiveness, conflict resolution and ERP system effective
implementation. Wang and Chen (2006), also found no relationship between
communication effectiveness and ERP system success, but established a relationship
between conflict resolution and ERP system success. Apparently, the incorporation of
knowledge concerning technical aspects of ERP systems is more important than
effective handling of communication, as well as conflict resolution among
organizational members of Greek companies.
From the above, it is apparent that ERP adopting companies should build the
necessary structures in order to facilitate the procedure of knowledge transfer. System
users not only need to be taught the newly implemented ERP technology, but they,
furthermore, need to learn more about their new organizational responsibilities.
Moreover, they should actively try to acquire maximum results from the use of the
ERP system, since passive attitude is not a path that leads to successful ERP
implementation.
In order to do so, the adopting company should, firstly, understand that with the use
of an ERP system every employee is being continuously trained. Therefore, companies
should provide opportunities for employees to enhance their skills by providing
training opportunities on a continuous basis, in order to meet the changing and
complex needs of the business environment (Bingi et al., 1999).
Moreover, the adopting company should make sure that the knowledge transfer
procedure is not short or inconclusive, since the literature recognizes the limited
consultation period as a factor that undermines possible positive effects (Nah et al.,
2001). Furthermore, since it is difficult for consultants to pass the knowledge to
computer illiterate employees, the adopting company should organize computer
seminars prior to the implementation of the new ERP system. Finally, the adopting
company should appoint its most prominent employees (from all functional business
areas) to follow the implementation procedure step by step, so as to be able to play the
role of the “internal consultant” after the withdrawal of the professionals.

5.3 Top management support

According to the statistical analysis, the role of top management support seems to be of
less important that the one provided by users, since top managers assist only in the
resolution of conflicts (a factor that has no relationship with ERP system effective
implementation), while user support influences both communication effectiveness and,
 JEIM more importantly, knowledge transfer (a factor that is related with ERP system
25,1 effective implementation). These findings are in line with the corresponding ones in the
studies of Wang and Chen (2006) and Wang et al. (2007).
On a practical level, the above imply that a company needs to ensure user support in
order to be led into a successful ERP implementation. This can be achieved by allowing
future users to:
74 .
report their views on the necessity of the implementation;
.
contribute to the specifications of the system;
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.
participate in the implementation process; and
.
collect various rewards upon successful use of the implemented ERP system.

Without the active participation and the overall acceptance of its users, every ERP
system, no matter how expensive and elegant, is destined to produce less positive
results that the ones anticipated, or even fail miserably.

5.4 Overall conclusions

In general, the present study argues that consultant support and knowledge transfer
are the two key factors for ERP system success. The consultants may improve the
performance of ERP systems directly, through their experience and technical expertise
and indirectly through the effective transfer and sharing of ERP system knowledge
among various inter-organizational members. In other words, the transfer of
knowledge from the consultants may raise the level of user know-how, then users
subsequently should be able to successfully maintain and further modify the ERP
system without consultant engagement.
Therefore, practical efforts in hiring the right consultants are essential, especially
since the consulting fees are quite significant. Moreover, ERP adopting companies
should improve their knowledge management capabilities in order to successfully
facilitate the transfer of knowledge from consultants. In order to pursue a successful
ERP implementation and gain sustainable competitive advantage, companies need to
develop their internal knowledge capabilities before implementing an ERP system.
The building of these capabilities will ensure that the knowledge offered by
consultants is properly disseminated throughout the organization. Organizational
practices, culture, and structure should be reinforced to address this necessity (Nonaka
and Takeuchi, 1995).

6. Impact of the research

The empirical research included in the present paper has a dual impact. On the one
hand, offers important guidelines to companies implementing an ERP system and on
the other, develops a coherent conceptual framework that thoroughly investigates the
process of the effective implementation of an ERP system, thus, broadening the
understanding on the issue. Given the influence of ERP systems on business success,
such a dual contribution seems rather significant for both practitioners and academics.

7. Limitations and future research

A limitation of the present study is the relatively small size of the sample. This may be
attributed to the nature of the population of the study (Greek companies that have
 implemented an ERP system), which is rather small and difficult to be defined due to Factors affecting
lack of available data. In addition, IT managers were often hesitant to reveal inside effectiveness
information about the company’s policies, as well as information regarding the ERP
system performance. Given that companies in Greece are mostly small and
medium-sized, most of them do not have an autonomous IT department and are using
external IT specialists to assist with the system’s implementation and operation. As a
result, it was not always possible to contact the internal staff of each company, and, 75
therefore, gather an overall and consistent evaluation of the ERP system implementation.
The present study has emphasized the vital role of the consultants in enhancing the
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performance of the ERP system, by means of their experience and the transfer of their
knowledge and technical expertise to the ones that have acquired and are using the
ERP system. Further research on the effective implementation of the ERP systems is
suggested with larger samples that would, probably, offer more information and
strengthen the initial outputs of the present research. Moreover, it would be interesting
to include additional variables to the proposed conceptual framework of the present
study (e.g. change management, team morale and motivation, training, job redesign)
and finally, gather empirical data from all company personnel, so as to achieve a
rounder view of the subject under investigation.

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About the authors

78 Dimitrios Maditinos is Assistant Professor of Information Technology, Finance and Financial
Modeling in Kavala Institute of Technology, School of Business and Economics, Greece. He holds
degrees in Business Administration with specialization in Information Technology from Lund
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University, Sweden, and a PhD from the Business School, Greenwich University, UK. Before
becoming a full academic he worked in a senior position for the Greek Productivity Center,
responsible for professional training in Information Technology and Management. His research
interests are in financial modeling, performance measurement systems, investors’ behavior in
stock exchanges, financial information systems and electronic commerce. Dimitrios Maditinos is
the corresponding author and can be contacted at: dmadi@teikav.edu.gr
Dimitrios Chatzoudes is a PhD Candidate in the Department of Production and Management
Engineering of Democritus University of Thrace, Xanthi, Greece. His bachelor degree is on
business administration and his postgraduate degree on international economics. His academic
interests include research methods, international relations and production management.
Dr Charalampos Tsairidis is an Assistant Professor in the Department of Social
Administration of Democritus University of Thrace, Komotini, Greece. He studied
Mathematics and completed his PhD thesis at the University of Ioannina, Ioannina, Greece.
Topic of thesis: statistical information theory and censoring. His main research interests are in
the area of statistical information theory, statistical data analysis and social statistics.

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