HCBE Faculty Articles

Title

Empirical Lessons from Failure of ERP Systems in Small and Medium Businesses

Document Type

Article

Date

2016

Publication Title

Southern Business & Economic Journal

ISSN or ISBN

0743-779X

Volume

39

Issue

1

First Page

25

Last Page

50

Description

Implementation of Enterprise Resource Planning (ERP) systems is extremely difficult and more than half of U.S.-based small and medium businesses (SMBs) often fail to achieve desired outcomes. Our study empirically gleans lessons from failure of ERP systems in SMBs and provides useful guidelines for greater implementation success. Participants from SMB stakeholders involved in ERP implementation participated in a qualitative Delphi study to develop a consensual elicitation of factors for failure of ERP systems in SMB. Our results show that the main reasons for failure of ERP implementation are lack of organizational commitment and leadership support at the top as well as a lack of staffing and specific change management initiatives at the bottom. We suggest several guidelines to achieve greater success in ERP implementation. Specifically, project management discipline that trickles down from the top to the bottom of the organizations through several internally aligned projects linked across the hierarchy of an organization is what we propose from our study. Managers, employees, vendors and consultants in ERP implementation projects would have clearly defined roles and responsibilities. We conclude with limitations of the study, and managerial implications for ERP implementation initiatives.

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