MINISTRY OF EDUCATION AND TRANNING UNIVERSITY OF ECONOMICS HO CHI MINH CITY ------------ LÊ THỊ THU CHUNG CRITICAL SUC CESS FACTORS OF ENTERPRISE RESOURCE PLANNING SYSTEMS IMPLEMENTATION SUCCESS IN VIETNAM THESIS OF MASTER OF BUSINESS ADMINISTRATOR HO CHI MINH CITY – 2012 TIEU LUAN MOI download : skknchat@gmail.com MINISTRY OF EDUCATION AND TRANNING UNIVERSITY OF ECONOMICS HO CHI MINH CITY ------------ LE THI THU CHUNG CRITICAL SUCCESS FACTORS OF ENTERPRISE RESOURCE PLANNING SYSTEMS IMPLEMENTATION SUCCESS IN VIETNAM Subject: Master of Business Administrator Code: 06.02 THESIS OF MASTER OF BUSINESS ADMINISTRATOR ADVISOR: DR. NGUYỄN THỊ NGUYỆT QUẾ HO CHI MINH CITY – 2012 TIEU LUAN MOI download : skknchat@gmail.com i ACKNOWLEDGEMENT I would like to take this opportunity to express my gratitude to all those who have helped and supported me during the time I conducted the study. First of all, I would like to express my deepest gratitude to my advisor, Dr. Nguyen Thi Nguyet Que, for her generous and patient guidance to my thesis.
Her inspiring advices are extremely essential and valuable for me to finish this thesis. The advisor is very knowledgeable, professional, and nice to me all the time. I feel very lucky and deeply appreciate her to give a chance to be her student. Secondly, I would like to show sincere gratitude to faculty members for their enthusiastic support.
Thirdly, I would like to send special thank you to my friends, members of ERP forum, my work partners.who supportively help me so much to finalize the questionnaire, take part in the survey for pilot test as well as the main study. Lastly, I would like the send the most special thanks to my family, especially my parents who are always there for me with so much love, care and encouragement. Le Thi Thu Chung Ho Chi Minh, October 2012 TIEU LUAN MOI download : skknchat@gmail.com ii COMMITMENT I hereby would like to commit that the thesis, “Critical success factors of Enterprise Resource Planning systems implementation success in Vietnam”, was accomplished based on my independent and serious studies and researches. The data was collected in reality and it has clear origins.
In addition to that, the data would be trust-worthily handled and it has never been released in any menu. Le Thi Thu Chung TIEU LUAN MOI download : skknchat@gmail.com iii TABLE OF CONTENT ACKNOWLEDGEMENT. II TABLE OF CONTENT .III LIST OF TABLE. V LIST OF FIGURE.
Research questions and objectives. Practical significances of the study. Scope and approach. Structure of the thesis.
6 CHAPTER 2 LITERATURE REVIEW. Definition of ERP. Situation of ERP in Vietnam. Proposed conceptual model and hypotheses.
Qualitative pilot study. Quantitative pilot study. Descriptions of sample. Reliability and validity of the measurement scale.
Testing the research model and the hypotheses .45 TIEU LUAN MOI download : skknchat@gmail.3 Testing the moderating relationship. Description of statistics of overall ERP implementation success. Discussion of findings .3 Contribution of the current study .4 Limitation and future research .61 LIST OF REFERENCE .87 TIEU LUAN MOI download : skknchat@gmail.com v LIST OF TABLE Table 2. 1: ERP systems history.
2: Unified CSFs model by Esteve & Pastor (2000). 3: 22 CSFs proposed by Somers & Nelson (2001). 4: seven broad categories of CSFs by Nah & Delgado (2006) .5: Eleven key CSFs by Nah, Lau & Kuang (2003). 6: Four CSFs and 1 moderator proposed by Nah et al.7: Measurement of ERP implementation success by Petroni (2002) .1: Survey items in the study .2: Reliability of scales .3: KMO and Barlett's Test (DV) .4: Total variance explained .5: Rotated Component Matix(a) .6: Correlation of constructs 1 .11: Model Summary of H5 1 .12: Coefficients of H5 hierarchical regression 1 .13: Model summary of H6 1 .14: Coefficients of H6 hierarchical regression 1 .15: Model Summary of H7 1 .16: Coefficients of H7 hierarchical regression 1 .17: Model summary of H8 1 .18: Coefficients of H8 hierarchical regression 1 .20: Descriptive statistic of ERP 1 .21: Levels of importance of factor 1.
56 TIEU LUAN MOI download : skknchat@gmail.com vi LIST OF FIGURE Figure 2.1: Modules of ERP system .2: Proposed conceptual framework .1: The revised research model 1. 55 TIEU LUAN MOI download : skknchat@gmail.com 1 ABSTRACT Enterprise resource planning (ERP) systems with high level of integration can help improve capability of customer service, productivity, cost reduction, inventory turnover and provide effective supply chain management and e-commerce. ERP has been widely adopted in many countries, but in Vietnam it is still very limited. Trend of globalization and fierce competition push Vietnamese enterprises into having effective management and optimize cost.
However, there have been many failed attempts in implementing ERP systems. This research aims to examine the critical success factors of success of ERP implementation. The study was conducted in twenty five companies in Hochiminh, Dong Nai, and Binh Duong (out of eighty one companies throughout Vietnam) with “go live” ERP systems. The results of the study indicate Top management support, Teamwork, Enterprise-wide communication and Project management program as critical success factors of ERP implementation success.
The results also show that Organizational culture is the moderator which positively moderates the relationships between Top management support, Teamwork, Enterprise-wide communication, Project management program and ERP implementation success. TIEU LUAN MOI download : skknchat@gmail.com 2 CHAPTER 1 INTRODUCTION 1. Research background For the last few decades, business management strongly relies on the information. The use of Management Information system (MIS) is being proved to lead to better planning, better decision making and better result.
MIS is defined by Davis and Olsen (1985) as an integrated user-machine system for providing information to support information management and decision making functions in an organization. This study will look into one of the most advanced and sophisticated MIS, the Enterprise Planning System (ERP) and the critical success factors for its successful implementation. Generally, ERP systems help organizations increase level of customer service, productivity, cost reduction, inventory turnover and provide effective supply chain management and e-commerce. The ERP systems are designed to develop plans and schedules so that the right resources (manpower, material, machinery and money) are available in the right amount when needed (Wallace and Kremzar, 2001).
In reality, ERP implementation is costly, complicated and time-consuming. According to survey result in 2010 by Panorama Consulting Group, on average, an ERP project takes about 18.4 months with total cost of $6.4 % of ERP projects exceed budget, 35.5% of projects take longer than expected duration and 40% of company face with operational disruption after “go-live”. In extreme cases, companies have even had to close because of vast ERP investments that did not go live, an example being the FoxMeyer Drug Company that ends into bankruptcy (Scott and Vessey, 2002). TIEU LUAN MOI download : skknchat@gmail.com 3 In developing countries in Asia, the rate of ERP adoption was very low and several years behind advanced countries (Rajapakse & Seddon, 2005; Ngai et al.
In Vietnam, ERP systems are still new to the companies. The system just started to be seriously considered after WTO joining. Based on the information found on ERP forum (www.vn, http://eac.vn), there are about 81 corporate throughout Vietnam that implemented ERP systems as in Appendix 1 attached to this thesis. At present, there hasn’t been specific statistics or numeral analysis on successful and failed projects as well as the costs which were spent to gain an effective ERP system.
However in general, the effectiveness of ERP implementation in Vietnam hasn’t been high yet. A great number of businesses have implemented ERP but haven’t used up capacity of the system. Most of them only come to a halt at the level of control. These businesses can apply little of planning feature, while it is the prominent feature of the ERP.
The difficulties and high failure rate in implementation ERP systems have been widely attracted many researchers to discover critical success factors for ERP adoption in the world. Through comprehensive literature review, Ngai et al. (2008) indicate that much of the research focused on Western developed nations while there has been lack of research on the success or failure of ERP adoption in developing regions/countries. This study attempts to study critical success factors (CSFs) affecting ERP systems implementation success in Vietnam.
Research questions and objectives There’s no doubt about the benefits that ERP systems bring to organization. However, there are still many issues relating to ERP implementation which can become potential risks for ERP projects. The research aims to answer to the following question: Question 1: What are the critical success factors for the ERP implementation success? TIEU LUAN MOI download : skknchat@gmail.com 4 Question 2: What are the levels of effects that critical success factors have on the ERP success? Question 3: Does organizational culture enhance the relationship between critical success factors and ERP implementation success? Question 4: What is the state of ERP adoption in Vietnam? This study is conducted to identify factors influencing ERP implementation success. It seeks to examine and understand whether factors such as top management support, teamwork and composition, enterprise-wide communication and project management influence success of ERP adoption.
It also seeks to examine whether organizational culture positively moderates the relationship between these factors and ERP implementation success. The specific objectives are: - To examine the relationship between top management support and ERP implementation success. - To examine the relationship between teamwork and ERP implementation success. - To examine the relationship between enterprise-wide communication and ERP implementation success.
- To examine the relationship between project management program and ERP implementation success. - To examine the moderating effect of organizational culture on the relationship between top management support and ERP implementation success. - To examine moderating effect of organizational culture on the relationship between teamwork and ERP implementation success. - To examine moderating effect of organizational culture on the relationship between enterprise-wide communication and ERP implementation success.
- To examine moderating effect of organizational culture on the relationship between project management program and ERP implementation success. - To examine the state of ERP adoption in Vietnam. TIEU LUAN MOI download : skknchat@gmail. Practical significances of the study The results of the study are practically meaningful for implementation ERP systems in Vietnam.
The study helps organization to master the main factors influencing the success of ERP implementation. The results of the study will provide necessary measures to improve the success rate of adopting ERP systems, which results in improvement in performance and competition capability. The study will also enrich necessary knowledge for people who are working the field of ERP as well as those who are implementing or will implement ERP systems. Scope and approach Based on the list of corporate that have implemented ERP systems, the author attempts to conduct the study in twenty five companies in Ho Chi Minh, Binh Duong and Dong Nai with “go live” ERP systems.
The study is conducted in 2 phase: pilot study and main study. The purpose of pilot test is to test the content as well as the measurement of scales. Then the main study is to test the hypotheses and research model. Research method The study was carried out within 2 steps relating to two different methods: Qualitative method: The author would use the qualitative method by carrying out group discussions with five experienced people working in the field of ERP business.
The purpose of this step is to adjust and amend the translated questionnaire suitable with the subjects and purposes of the study. Quantitative method: Quantitative study would be carried out based on the data collected from the questionnaire. Quantitative study is implemented to evaluate the scale, verify the theoretical model. The scale is preliminarily tested the reliability and validity using Cronbach alpha and exploratory factor analysis carried TIEU LUAN MOI download : skknchat@gmail.com 6 out by the SPSS 20.
Multiple linear regression analysis and hierarchical regression would be used to test the proposed model and the hypotheses of the study.