Readiness for ERP Implementation in an Organization: Development of an Assessment Model

Abstract

Enterprise resource planning (ERP) is a game plan for planning and monitoring all of the resources of a business organization. It has been recognized as an effective management system leading to excellent planning and scheduling capability and significant improvements in productivity. It also provides dramatic increases in customer service, and improved resource performance such as much higher inventory turns, and greater reduction in materials costs. Yet articles in the business press have described ERP implementation failures, and consequent company reluctance to invest in ERP. The potential for substantially improved enterprise resource planning coupled with the high uncertainty surrounding failed implementation efforts, calls for a critical new look at the determinants of, and influences upon, a firm's decision to adopt ERP. This paper responds by emphasizing the criticality of performing a deep analysis of a firm's readiness to undertake an ERP initiative. We suggest that this readiness assessment provide detailed answers to two fundamental questions: What is a firm's current ERP capability? and What changes must be in place before embarking on a ERP initiative? A model to assess ERP readiness is developed based upon the premise that business value is enhanced through the alignment of complementary factors occurring along four dimensions, technoware, humanware, inforware, and orgaware.

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