ERP IMPLEMENTATION BARRIERS FACED BY SMES IN THE CONSTRUCTION INDUSTRY IN DUBAI A study submitted in partial fulfilment of the requirements for the degree of Master of Science in Information Management at THE UNIVERSITY OF SHEFFIELD by PRASHANTH JAYAPRAKASH (Reg. No. 100140992) September 2011
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ERP IMPLEMENTATION BARRIERS FACED BY SMES IN THE
CONSTRUCTION INDUSTRY IN DUBAI
A study submitted in partial fulfilment
of the requirements for the degree of
Master of Science in Information Management
at
THE UNIVERSITY OF SHEFFIELD
by
PRASHANTH JAYAPRAKASH
(Reg. No. 100140992)
September 2011
Acknowledgement
I owe my deepest gratitude to my supervisor, Dr. Alex Peng, whose supervision,
encouragement and support throughout the study enabled me to develop an
understanding of the subject. It would have been next to impossible to write this
dissertation without his help and guidance.
I am grateful to my friend, Gheevarghese, for making the arrangements at National
Group, Dubai for conducting this study and for his moral support.
Lastly, I offer my sincere regards to all those who supported me in any respect during
the completion of this work.
Prashanth Jayaprakash
Abstract
Background. Literature reveals that there adoption of ERP systems in the
construction sector is relatively low. There is a serious lack of research about ERP
implementation barriers faced by SMEs in the construction sector in Dubai.
Aims. The study aimed to identify and explore the causes and consequences of the
critical barriers in implementing ERP systems in SMEs in the construction industry
in Dubai using a case study.
Methods. With the help of a critical literature review, a barrier ontology was built
consisting of twenty one critical barriers under the categories namely organisational
barriers, system barriers and cultural barriers. Based on the barrier ontology, a
questionnaire was sent to all the forty prospective users of ERP systems in the case
company. The top seven barriers were identified based on response to the
questionnaires. Semi-structured interviews were conducted with three managers to
explore the causes and consequences of the identified top seven barriers.
Results. Organisational and System barriers were identified as the major barriers in
implementing ERP systems in SMEs in the construction system in Dubai. The
inability of the ERP systems to suit the requirements of the construction industry
remains a major problem in adopting ERP systems. Moreover, the lack of clear
strategic goals and readiness by the adopting organisation has a negative impact on
the implementation of ERP systems in SMEs in the construction sector.
Conclusion. It is concluded that organisations need to have a clear vision and plan
about the ERP implementation before adopting ERP systems. Further extensive
research is needed in order to generalise the results more correctly.
Word Count: 14275
1
Table of Contents List of figures .......................................................................................................................... 5
List of tables ........................................................................................................................... 6
3.2.11. Reluctance to adopt technology ................................................................ 26
3.3. System Barriers ..................................................................................................... 26
3.3.1. Non-conformance of the system to organisational needs ........................... 26
3.3.2. Insufficient support from the consultant ...................................................... 26
3.3.3. Insufficient support and services from system vendor ................................ 27
3.3.4. Need for extensive customisation of the system to suit business needs .... 27
3.3.5. Long implementation time ............................................................................ 27
3.3.6. Need for expensive hardware/networking equipment ................................. 28
3.4. Cultural Barriers .................................................................................................... 28
3.4.1. Power centralisation and centralised decision making due to high power distance 28
3.4.2. Not reporting problems/faults because of high power distance ................. 28
3.4.3. Effect of personal relationships to ensure success in business ................... 29
3.4.4. User resistance in using ERP because of cultural misfit between Western and Arabic world .......................................................................................................... 29
1.1. Research context Enterprise Resource Planning (ERP) system is a business management system that
integrates a set of modular software applications which can be used to manage and
integrate all business functions within an organisation (Shehab et al., 2004). It
includes tools for financial and cost accounting, sales and distribution, materials
management, human resource, production planning and computer integrated
manufacturing, supply chain and customer information. ERP systems provide
information to those who need it when they need it. The benefits of a properly
selected and implemented ERP system can be considerable, e.g. reduction in
production time and cost, generation of more accurate demand forecasts and
enhanced customer service (Ragowsky and Somers, 2002).
ERP systems have traditionally been applied in capital intensive manufacturing
companies. However, ERP systems expanded beyond the manufacturing sector and
have been largely adopted by companies in service industry (Shehab et al., 2004). It
is generally considered that ERPs are for large firms and smaller firms have to adjust
according to the practices and software adopted by the large firms (Rao, 2000).
Small to Medium sized Enterprises (SMEs) have found difficulties in surviving with
the opening up of the economy. They have to leverage IT to stay competitive and
customer oriented. ERP is often considered the answer for the survival of SMEs
(Shehab et al., 2004).
It is pointed out that the success rate of ERP implementation in SMEs is very low.
This is mainly due to inefficiency and barriers that exist in these firms such as
shortage of resources, insufficient IS expertise, poor understanding about ERP,
irregular business processes and conflicting roles (Deep et al., 2008). It is, therefore,
crucial for SMEs to standardise existing business processes and organisational
8
structure in order to align with the new ERP environment (Newman and Zhao,
2008). It is argued that the improvements in business process should actually be
performed well before the start of ERP implementation (Lee et al., 2003). Deep et al.
(2008) highlight that inefficiencies inherent in SMEs will not only affect the
efficiency of ERP systems but may also result in the failure of ERP implementations
in SMEs. Christofi et al. (2009) emphasise that it is vital for SMEs to identify and
improve any inherent deficiencies existing in their business during ERP preparation
or pre-implementation in order to successfully complete the implementation on time
and budget.
Construction companies face enormous challenges of managing project schedules,
budgets, safety and quality to meet the requirements (Chung et al., 2008). The
construction industry is considered to be traditional and is hesitant in adopting new
technologies (Bjork, cited in Kang et al., 2008: 852). Construction companies have
been implementing ERP systems over the last few years to integrate their business
processes and resources, particularly those related to project accounting procedures
and practices (Chung et al., 2008). It can be observed that the benefits of technology
are experienced more by smaller companies rather than larger firms. Even though
many construction firms have identified the benefits of ERP systems, they hesitate to
implement these systems due to high costs, uncertainty and risks associated with it
(Kang et al., 2008).
In the recent years, Dubai has emerged as a global city and a business hub. Even
though Dubai’s economy was built on oil industry, real estate has become one of the
main sources of revenue for Dubai. A large number of construction works is going
on in and around Dubai. It has recently attracted much attention through many
pioneering large construction projects. The construction boom in Dubai created a
plethora of SMEs in the construction industry.
9
There is a serious lack of research in the construction industry regarding ERP
implementation barriers in SMEs. SMEs in the construction industry have limited
guidance to adopt and successfully implement ERP systems. Moreover, less study
has been reported in the context of Dubai. This study will help in identifying the
major obstacles faced during the implementation of ERPs in SMEs in the
construction industry in the context of Dubai.
1.2. Research Question A. What are the barriers faced by SMEs in the construction industry in Dubai in
implementing ERP systems?
B. What are the causes of these ERP implementation barriers and its consequences?
1.3. Research Objectives (i) To do a literature review on ERP systems in general
(ii) To do a literature review on ERP implementation barriers in SMEs in the
construction industry
(iii)To identify the benefits of using ERP systems by SMEs in the construction
industry
(iv) To investigate the barriers faced by SMEs in the construction industry in Dubai
in implementing ERP systems using a case study approach.
(v) To explore the causes of the ERP implementation barriers and its consequences
1.4. Methodology
This research will be carried out using a predominantly deductive theory. A case
study design will be used as the framework for collecting and analysing data. Firstly,
a barrier ontology will be built after reviewing the existing literature. Based on this
ontology, a questionnaire will be developed. The questionnaire will then be sent to
all the prospective users of the ERP software (approximately forty users) to identify
the main barriers in implementing the ERP system. A frequency table of the
responses will be formed and the mean of all the critical barriers will be calculated,
10
to identify the top seven critical barriers. Subsequently, based on the top seven
critical barriers, a semi-structured interview will be conducted with some expert
users of the system (around five users), to explore the causes and consequences of
each of the top seven barriers. Thematic analysis will be used to analyse the
interview data. Multiple methods of data collection provide different perspectives
about the same topic. It allows the findings from one method to be checked against
the findings from another and enhances the validity of data (Denscombe. 1998). The
case will then be discussed on the basis of the findings from both the questionnaire
and interviews. Finally, recommendations will be made based on these findings and
also the areas for further research will be identified.
1.5. About the case company National Group of Companies is one of the leading and respected group of
companies in the United Arab Emirates based in Dubai. The group consists of the
following five companies namely:
i. National Dewatering & Land Draining Co. (LLC)
ii. National Piling
iii. National Pump Industry Co. (LLC)
iv. National Engineering Contracting
v. First National Heavy Equipments Rental (LLC)
National Group caters the diverse needs of the construction industry in and around
Dubai by providing innovative solutions and excellent services. It plays a major role
in the development of infrastructure products. National Group of Companies has a
very good reputation in the construction industry and has successfully executed over
a thousand projects.
National Group of Companies was selected as the case company to conduct this
study because of the ongoing ERP implementation project at three of its member
companies viz National Dewatering & Land Draining Co. (LLC), National Piling
11
and National Engineering Contracting. The implementation is being managed by one
of the leading software vendors in the Middle East with its base in India. A total of
seven modules – Sales, Procurement, Inventory, Finance, HRMS, Workshop and
Maintenance and Job contracting - are being implemented as part of the ERP
implementation project. Out of the seven modules, Job contracting module is
different for all the three companies where the ERP is being implemented.
National Dewatering and Land Draining Co. provides dewatering equipment and
services for land drainage to its wide clientele across diverse construction segments.
The company’s innovative solution plays a vital role in the construction sector thus
plays a major role in the development of infrastructure project.
National Piling is one of the key players in the field of geotechnical and foundation
engineering. It operates in association with National Dewatering and Land Draining
Co. With its expertise, National Piling carries out small to large projects to the
satisfaction of its clients.
National Engineering Contracting is one of the multi faceted engineering,
contracting and construction companies based in Dubai. The company has expertise
in project management, engineering, procurement and construction and its
operations spread across all the corners of United Arab Emirates. It provides a
complete solution to all types of construction requirements.
1.6. Structure of the dissertation This dissertation is structured as follows. The next two chapters cover literature
review about ERP systems in general and ERP implementation barriers in SMEs in
the construction industry respectively. The fourth chapter is research methodology
which discusses about research design and methods to collect and analyse data. The
next chapter discusses the findings of the questionnaire in detail. The sixth chapter
discusses the findings of the interview. Finally, the seventh chapter contains
12
conclusion and recommendations. The structure is diagrammatically shown in
Figure 1.
Figure 1: Structure of dissertation
1. Introduction
2. Literature review – ERP systems in general
3. Literature review – ERP implementation barriers
4. Research Methodology
5. Questionnaire findings
6. Interview findings
7. Conclusion and Recommendations
13
2. Literature review on ERP Systems
2.1. Introduction ERP systems are software systems which include numerous products to support
every day business operations and decision making. It serves many industries and
various functional areas in an integrated way and attempts to automate any data
oriented management processes (Hitt et al., 2002). Mabert et el. (2003:302) define
ERP systems as “enterprise-wide online interactive systems that support cross-
functional processes using a common database.”. ERP attempts to assimilate
suppliers and customers with the manufacturing environment of the organisation.
The multitude of interconnections makes sure that information in one part of the
business is available to any other parts. It is thus possible to view the business as a
whole and helps people analyse data, avoid redundant actions and make better
decisions (Gupta, 2000). ERP systems are process oriented IT tools for improving
business performance (Al-Mashari et al., 2003). It is believed that “ERP is the finest
expression of the inseparability of business and information technology.” (Gupta,
2000:114).
2.2. Benefits of ERP systems ERP adopters differentiate themselves from competitors because of both the
productivity benefits accruing from ERP usage and the hidden barrier to entry
produced by the successful ERP implementation. The financial markets constantly
reward ERP adopters with higher market valuation both during and after
implementation (Hitt et al., 2002). Umble et al. (2003) state that a successful ERP
implementation can considerably cut the operating costs, predict demand forecasts
more accurately, speed production cycles and significantly improve customer
service. The two major benefits ERP provides are (i) an integrated enterprise view of
the business that incorporates all departments and functions, (ii) an enterprise-wide
database to enter, record, process, monitor and report all business transactions
14
(Umble et al., 2003). Shang and Seddon (cited in Al-Mashari et al., 2003) classify
ERP benefits into five categories as below:
(i) Operational – relates to reduction in cost, reduction in cycle time, improvement
in productivity, improvement in quality and improvement in customer services.
(ii) Managerial – relates to better management of resources, better decision making
and planning and improvement in performance.
(iii)Strategic – supports business growth, supports business alliance, builds business
innovations, builds cost leadership, generates product differentiation and builds
external linkages
(iv) IT infrastructure – builds business flexibility, reduces IT cost and increased IT
infrastructure capability
(v) Organisational – supports organisational changes, facilitates business learning,
empower and build common values
2.3. ERP Implementation – Challenges and Critical Factors ERP implementation is usually a formidable challenge and a typical implementation
may last from one to five years (Mabert et al., 2003) and it is often loaded with
business and technical risks (Hitt et al., 2002). Despite the benefits provided by
ERP systems in managing and integrating all business processes of an organisation,
it often costs a huge amount to purchase, consumes significant time to install and
more importantly can result in disturbing organisational changes (Volkoff, cited in
Al-Mashari et al., 2003). It also creates extensive requirements for training, dips in
productivity levels and mishandled customer orders that can damage the bottom line
at least in the short term (Stein, cited in Umble et al., 2003). ERP systems often
require changes to processes throughout the organisation for their successful
implementation (Mabert et al., 2003). The difficulty in implementing an ERP system
is mainly due to the pervasiveness of changes associated with ERP (Hitt et al.,
2002). Even though some companies have benefited significantly from ERP
implementation, others have to scale back their projects and accept nominal gains or
even abandon the implementation (Soh et al., 2000). Since ERP projects involve
15
investment in terms of both resources and resulting organisational changes,
companies are very keen about the implementation times and budgets. They often go
to great lengths to set sensible timelines and budgets (Mabert et al., 2003).
Even though most of the ERP implementation projects are unique in many ways,
some of the fundamental strategies, activities and issues are common to all of them,
irrespective of the package implemented. The strategy used for implementation is a
prime factor in determining the outcome of the ERP project regardless of the type of
the system implemented. Organisations that are on time and on or under budget do a
better job in planning their ERP project (Mabert et al., 2003). ERP systems impose
its own logic on a company’s strategy, organisation and culture and therefore its
selection should be conducted with utmost care. The company which implements
ERP should mostly accept the supplier’s assumption about the company and change
existing processes to conform to them. The company should recognise its crucial
business needs and the required features and characteristics of the system (Umble et
al., 2003).
Umble et al. (2003) have identified the following factors as critical to the successful
implementation of ERP:
(i) Clear understanding of strategic goals – It is important that the organisation
should clearly define why the ERP system is being implemented and what crucial
business requirements the system will address.
(ii) Commitment by top management – Strong leadership, commitment and
participation by top management are crucial for the successful implementation of
ERP systems.
(iii)Excellent project management – Excellent project management is essential for a
successful ERP implementation. This includes a clear definition of objectives,
development of both a work plan and a resource plan and careful tracking of project
progress.
16
(iv) Organisational change management – ERP, by its very nature, imposes major
changes on the structure and processes of most companies. The resulting changes
significantly affect organisational structure, policies, processes and employees.
Therefore, it is essential to utilise proper change management techniques to deal
with the changes created by the implementation.
(v) A good implementation team – The implementation team is vital since it is
responsible for creating the overall schedule of the entire project, assigning
responsibilities for various activities and determining the due dates. The team should
comprise of excellent resources who are chosen for their skills, past
accomplishments, reputation and flexibility.
(vi) Extensive education and training – The end users should be trained properly to
earn the full benefits of ERP systems. For the training to be successful, it should
start early, preferably well before the implementation begins.
Based on the set of characteristics relative to their nature and timing during the
implementation process, Mabert et al. (2003:304) categorised them into three
namely “planning effort”, “implementation decisions” and “implementation
management”. Planning efforts relate to all factors that need to be dealt with before
the start of the project. These include top management support and involvement in
the planning of the project, formation of the implementation team and addressing
main technology issues. Implementation decisions relate to strategic options on how
to carry on the implementation process. These include whether to implement the
whole system in one stretch or in a phased manner and the degree of customisation
and reengineering. Implementation management relates to all actions during the
implementation process.
Gupta (2000) states that the main obstacle faced by all companies in implementing
ERP systems are the resistance to change. It is either because the employees are
unwilling to learn new techniques or the IT department is reluctant to change
because of its attachment to the product. With top management support, appropriate
17
implementation team and involvement of users in the implementation process can
alleviate resistance. Cost and time overruns is another persistent problem with ERP
implementation (Gupta, 2000). The amount of modifications to the system badly
affects both implementation times and cost (Mabert et al., 2003). Another problem
which is common in all implementation is poor end user training. The user training
should not only aim at educating the users as to how to use the system but also to
help them understand the business processes behind the ERP applications (Gupta,
2000). Another key issue that arises during ERP implementation is performance.
2.4. ERP systems and SMEs Most of the big firms confine their business with only those companies that have
implemented the same ERP software as the big firms. It is generally considered that
ERPs are for large firms and smaller firms have to adjust according to the practices
and software adopted by the large firms. ERP systems are expensive which makes it
unaffordable for SMEs. This does not imply that SMEs do not require an ERP
system. SMEs lack money power and business resilience of large firms and thus
requires greater need for information integration (Rao, 2000). SMEs select ERP
systems which closely matches the specific functions and processes of their business
in order to easily manage the business, increase operational efficiency and to reduce
cost (Umble et al., 2003). Rao (2000) points out that SMEs should adopt an ERP
system which meets the criteria detailed below:
(i) Affordable – attractive prices including implementation support
(ii) Domain knowledge of suppliers – the supplier should have sufficient knowledge
about the industry
(iii)Local support – support from suppliers in terms of both IT expertise and domain
knowledge is required for effective implementation
(iv) Technically upgradable – supplier should upgrade the product when new
technologies become available in the future
(v) Uses latest technology
18
It is pointed out that the success rate of ERP implementation in SMEs is very low.
This is mainly due to inefficiency and barriers that exist in these firms such as
shortage of resources, insufficient IS expertise, poor understanding about ERP,
irregular business processes and conflicting roles (Deep et al., 2008). It is, therefore,
crucial for SMEs to standardise existing business processes and organisational
structure in order to align with the new ERP environment (Newman and Zhao,
2008). It is argued that the improvements in business process should actually be
performed well before the start of ERP implementation (Lee et al., 2003). Deep et al.
(2008) highlight that inefficiencies inherent in SMEs will not only affect the
efficiency of ERP systems but may also result in the failure of ERP implementations
in SMEs. Christofi et al. (2009) emphasise that it is vital for SMEs to identify and
improve any inherent deficiencies existing in their business during ERP preparation
or pre-implementation in order to successfully complete the implementation on time
and budget. The study conducted by Christofi et al. (2009) reveal that changes are
required not only in business processes but more importantly in people, technology
and organisational policies so as to improve the inefficient business processes. The
study also reveals that SMEs often consider ERPs as an omnipotent solution to all
their problems which may divert the attention from the impacts of existing
organisational issues resulting in the potential failure of ERP.
2.5. ERP systems in construction industry Construction companies face enormous challenges of managing project schedules,
budgets, safety and quality to meet the requirements (Chung et al., 2008). The
construction industry is considered to be traditional and is hesitant in adopting new
technologies (Bjork, cited in Kang et al., 2008: 852). It is widely recognised in
construction industry that human intelligence and experience are the most important
assets for successful business (Shi and Halpin, 2003). The investment in IT in the
construction industry is comparatively lower than other industries and this is
believed to be the reason for poor productivity in the construction industry (Ekstrom
and Bjornsson, cited in cited in Kang et al., 2008: 852). Shi and Halpin (2003) point
19
out that over 90% of construction companies are SMEs and they cannot afford to
spend a fortune to implement ERP systems. Since ERP systems give emphasis to
standardisation and automation, they suit best for standard and repetitive operations
and management processes (Jacobs and Whybark, cited in Shi and Halpin,
2003:219) and do not quite support the needs of construction firms. Construction
companies have been implementing ERP systems over the last few years to integrate
their business processes and resources, particularly those related to project
accounting procedures and practices (Chung et al., 2008). It can be observed that the
benefits of technology are experienced more by smaller companies rather than larger
firms. Even though many construction firms have identified the benefits of ERP
systems, they hesitate to implement these systems due to high costs, uncertainty and
risks associated with it (Kang et al., 2008).
One of the main reasons for construction companies to utilise ERP is to improve its
efficiency and eliminate waste. It is, however, observed that construction companies
have little to direct them in identifying the key success factors (Chung et al., 2008).
From the business point of view, a construction company operates in a different way
from a manufacturing company. The construction business is project oriented.
Moreover, many management processes in the construction industry cannot be
standardised (Shi and Halpin, 2003). The existing ERP systems can hardly meet the
requirement of construction industry as they are developed mainly for manufacturing
companies. Chung et al. (2009:207) highlight that “each construction project is
characterized by a unique set of site conditions, project team, and the temporary
nature of relationships between project stakeholders”. These unique characteristics
of construction firms result in the extensive customisation of ERP software which in
turn increases the challenge in implementing the software (Chung et al., 2009).
It can be observed that many construction firms adopt a “best-of-breed approach” to
implement ERP systems where separate software packages are selected for each
process rather than implementing a full package provided by major ERP vendors
20
(Tatari, cited in Chung et al., 2008:373). Chung et al. (2008:373) point out that the
reason behind adopting this approach is that “construction processes are less
standardized than manufacturing”. Barreiros et al. (2010) reinforce that a good
selection of ERP systems can increase the chances of success in implementing ERP
systems in construction industry. It can be argued that a poor selection of selection
of software will require major changes resulting in resource consumption and makes
it a high risk effort (Barreiros et al., 2010). Moreover, Shi and Halpin (2003) point
out that in order to address the requirements of construction industry, more research
is needed to develop an ERP knowledge base especially for construction industry.
2.6. Conclusion Projects in the past have failed mainly because of lack of focus, lack of proper
funding and minimal business participation (Gupta, 2000). A survey conducted by
Information Week reveals that the failure for IT related projects can be attributed to
poor planning or poor management, change in business goals during the project and
lack of business management support (Umble et al., 2003). An ERP project requires
extensive planning in advance of the implementation, an accelerated implementation
strategy, strong top management support during implementation and keeping the
customers and suppliers informed about the project (Mabert et al., 2003). The
benefits of ERP systems cannot be leveraged without strong coordination of efforts
and goals across business and IT personnel (Willcocks and Sykes, 2000). The
implementation of ERPs in SMEs is problematic because of the inefficient business
processes and internal problems in SMEs. Ignoring these organisational issues
during the ERP preparation stage will not only affect the success of ERP
implementation but also affect the use of the system after it goes live (Christofi et al,
2009). Implementation of ERP systems in constructions firms are challenging as the
ERP systems available on market are intended mainly for manufacturing firms.
Construction industry is project oriented and characterised by non-standard
procedures. This makes it difficult for ERP systems to suit the needs of construction
industry. A detailed literature review of the barriers to ERP implementation in SMEs
is discussed in the next chapter.
21
3. Barriers in implementing ERP systems
3.1. Introduction Implementing an ERP system in an organisation is a huge challenge and a time
consuming process. A study conducted by Mabert et al. (2003) revealed that even
though most of the ERP implementation projects are unique, they still have many
common strategies, activities and underlying issues, regardless of the package being
implemented. Stein (cited in Umble et al., 2003:244) highlights that implementing
an ERP system not only takes a lot of time and money but also brings about
disruptive changes in company’s culture, give rise to extensive training requirements
and even lead to dip in productivity of short term. Moreover, ERP systems require
considerable changes to processes throughout the organisation to ensure its
successful implementation (Mabert et. al, 2003). It is, therefore, obvious that there
are potential barriers in implementing an ERP system in an organisation.
The main objective of this chapter is to identify the potential barriers in
implementing ERP systems in SMEs in the construction industry in Dubai. The
barriers can be classified under the headings namely organisational barriers, system
barriers and cultural barriers. As pointed out by Polikoff et al. (cited in Peng and
Nunes, 2010a:603), “barriers to organisational activities may often exist within the
organisational context”. In view of this, a set of organisational barriers in the context
of SMEs have been looked into. Moreover, a set of barriers may arise because of the
technical limitations and drawback with the ERP system itself. These barriers are
organised under system barriers. Finally, since ERP packages reflect the business
models in western countries, it may give rise to cultural misfits in Asian countries
(Soh et al., 2000). The cultural misfits may give rise to potential barriers and are
discussed under the heading cultural barriers.
22
3.2. Organisational Barriers
3.2.1. Lack of clear strategic goals To implement an ERP system, it is necessary for the key people throughout the
organisation to create a clear and compelling vision about how the organisation
should work so as to “satisfy customers, empower employees, and facilitate
suppliers for the next three to five years.” (Umble et al., 2003:245). The goals,
expectations and deliverables should be clearly defined. Moreover, the organisation
should also carefully define the need for implementing the ERP system and the
crucial business requirements addressed by the system (Umble et al., 2003). A study
conducted by Mabert et al. (2003) revealed that a clear objective has a positive
impact in completing the ERP implementation on time. It is to be noted that an
organisation’s attempt to install a system without setting up clear vision and
understanding of the business needs can end up in a disaster (Davenport, cited in Al-
Mashari et al., 2003:358). Al-Mashari el al. (2003) reinforce that lack of clear
direction and strategic planning makes an ERP implementation suffer a huge failure.
3.2.2. Lack of commitment by top management A successful ERP implementation requires strong leadership, commitment and
involvement by the top management. Inputs from executive level play a crucial role
in analysing and rethinking existing business processes (Umble et al., 2003). Mabert
et al. (2003) points out that the involvement of senior management is required
throughout the project, from the start to completion, to ensure the successful
implementation of ERP systems. Moreover, top management support helps to reduce
resistance by users (Gupta, 2000). Al-Mashari et al. (2003) highlight that leadership
and commitment is the key element of success and is a must for successful and
effective ERP implementation.
23
3.2.3. Inadequate change management effort ERP systems may bring about drastic changes in the way organisations operate. The
structure and processes that exists in most companies do not comply with the
structure, tools and types of information provided by ERP systems (Umble et al.,
2003). Holland and Light (cited in Al-Mahsari et al., 2003:359) point out that
business process redesign is a pre-condition to take full advantage of an ERP system.
Moreover, Mabert et al. (2003) highlights that organisational change should be
developed in advance and continually updated during implementation process for the
successful implementation of ERP systems. It is to be noted that the changes brought
about by the implementation will result in resistance and chaos, if the employees are
not properly prepared for the impending changes. However, organisations can utilise
the opportunities provided by the ERP systems if they employ proper change
management techniques (Umble et al., 2003).
3.2.4. Conflict of interest among different departments or functional units One of the major barriers in introducing Information Systems (in this case ERP) in
an organisation is the lack of collaboration and communication between different
functional units within the organisation (Fletcher and Wright, cited in Peng and
Nunes, 2010a:606). Shanks et al. (cited in Aboelmaged, 2009:324) highlight that the
problem of coordination among different functional areas may lead to the failure of
ERP implementation. Markus (cited in Aboelmaged, 2009:324) points out that the
resistance in cross-functional IS implementation is an outcome of misfit in power
distribution.
3.2.5. Lack of IT expertise One of the main barriers to implement ERP systems in SMEs is insufficient IS/IT
expertise (Deep et al, 2008). It is to be noted that the success of ERP implementation
depends on the collaboration and co-operation between various experts in different
functional units within the company (Peng and Nunes, 2010a). It can, therefore, be
24
considered that lack of IT expertise can be a potential barrier in implementing ERP
systems in SMEs in construction industry in Dubai.
3.2.6. Unavailability of funds Although a range of ERP packages are available in the market especially for SMEs,
they are still expensive. Moreover, over 90% of construction firms are small to
medium sized firms (Shi and Halpin, 2003). It is obvious that the financial resources
of SMEs are limited and that most of the SMEs may find it difficult to afford ERP
systems (Shehab et al., 2004). It can, therefore, be assumed that lack of funds is a
potential barrier in implementing ERP systems.
3.2.7. Lack of user involvement The success of ERP implementation depends on effective teamwork (Rao, 2000). It
requires full support from the users to capture the requirements and map the work
flow correctly. Moreover, inputs from the users help to identify the problems with
the system. It also promotes exchange of information acquired through experience
and gain familiarity with the system (Umble et al., 2003). Gupta (2000) points out
that user involvement helps to reduce the resistance in using the system.
3.2.8. Inadequate user training Education about ERP systems is one of the widely identified success factor as the
understanding and acceptance of users is paramount in implementing ERP (Umble et
al., 2003). Rao (2000:84) underlines that “if people have to have the right attitude,
they must understand what ERP is and also what it is not”. With an ERP
implementation, users need to acquire considerable knowledge to solve the problems
with the structure of the system (Umble et al., 2003). Moreover, if the users do not
receive sufficient training, they may not use it properly and may not help in
improving the system (Wright and Donaldson, cited in Peng and Nunes, 2010a:608).
25
Lack of motivation among employees because of poor performance appraisal
A study conducted by Aboelmaged (2009) has revealed that lack of commitment,
interest and coordination among the employees is one of the major barriers in
implementing ERP systems. Behery and Paton (2008) reinforce that employees have
greater commitment to the organisation when the appraisal process is effective. If
there are no means to motivate the employees to perform well, they would rather
lose interest in their work. Successful ERP implementation requires complete
cooperation from users (Rao, 2000) and lack of motivation among employees can be
considered as a potential barrier to implement it.
3.2.9. Fear of loss of power and loss of job It can be perceived that staff consider information as one of the main signs of power
within the organisation (Damodaran and Olphert, 2000). Since the use of ERP
results in collaboration and information sharing across various functional units, staff
may fear that they may lose their power (Martinsons and Westwood, cited in Peng
and Nunes, 2010a:606). Moreover, ERP systems emphasise automation and it can
eliminate a lot of manual processes resulting in job redundancies (Shehab et al.,
2003). This can give rise to psychological problems in employees and can result in
resistance to use the system (Peng and Nunes, 2010a).
3.2.10. Low skilled staff Low skilled or employees with lower levels of education may find it difficult to use
technologically advanced systems like ERP. Moreover, they may not be willing to
make changes in the way they perform their job (Peng and Nunes, 2010a). Wright
and Donaldson (cited in Peng and Nunes, 2010a:608) highlight that low skilled or ill
trained staff can be a potential barrier to the use of ERP systems.
26
3.2.11. Reluctance to adopt technology The construction industry is considered to be conservative and hesitant in adopting
technology (Bjork, cited in Kang et al., 2008: 852). Moreover, in the construction
industry, it is widely recognised that human intelligence and experience are the key
to business success (Shi and Halpin, 2003). Therefore, it can be considered that
reluctance in adopting technology is a major barrier in implementing ERP systems.
3.3. System Barriers
3.3.1. Non-conformance of the system to organisational needs The ERP systems available in market are mainly developed for manufacturing
industry and it is difficult to meet the requirements of construction industry with
these softwares (Shi and Halpin, 2003). Moreover, construction business is project
oriented (Shi and Halpin, 2003) and each construction project is unique in many
ways (Chung et al., 2009). This results in extensive customisation of the ERP
software which makes the implementation challenging and a high risk effort (Chung
et al., 2009). It can, therefore, be considered that non-conformance of the system to
organisational needs is a potential barrier in implementing ERP systems. However,
Barreiros et al. (2010) point out that a good selection of ERP system increases the
success factor of its implementation in construction firms.
3.3.2. Insufficient support from the consultant Consultants play an important role in the successful implementation of ERP
systems. The support from the consultant has considerable effects on the quality and
progress of the implementation process (Chung et al., 2008). It is observed that
consultants play a key role in implementing and maintaining information systems
(Tsai et al, cited in Peng and Nunes, 2010a:608). Consultants usually address the
technical and knowledge gaps in the user companies (Peng and Nunes, 2010a).
Inexperienced consultants can thus hamper the successful implementation of ERP
systems.
27
3.3.3. Insufficient support and services from system vendor Lack of support and services from system vendors is considered a common hurdle in
introducing and using information systems (Wright and Donaldson, cited in cited in
Peng and Nunes, 2010a:608). A study conducted by Adam and O’doherty (cited in
Shehab et al., 2004:377) has revealed that the vendors not only play a crucial role in
technical terms but also helps their clients in “correcting their expectations and
perceptions of ERP systems and implementations”. Since the adoption of ERP
systems in the construction industry is relatively lower (Chung et al., 2008; Chung et
al., 2009), it can be inferred that the vendors lack the domain knowledge and skills
required to implement ERP systems in construction firms.
3.3.4. Need for extensive customisation of the system to suit business needs It can be observed that construction industry lacks standardisation and that many
management processes are difficult to standardise (Shi and Halpin, 2003). ERP
systems are built upon best industry practices. Moreover, the ERP systems available
in market are developed mainly for manufacturing companies (Shi and Halpin,
2003). As a result, construction firms need to do extensive customisation of the ERP
software which makes the implementation challenging and a high risk operation
(Chung et al., 2009). Mabert et al. (2003) underline that the implementation time and
cost increase considerable with the amount of customisation.
3.3.5. Long implementation time ERP implementation is an intensive process and it takes considerable time to
complete the implementation process (Al-Mashari et al., 2003; Mabert et al., 2003;
Umble et al., 2003). Since SMEs lack the business resilience of larger firms (Rao,
2000), they may not be able to dedicate the man hours required for such an extensive
process as it may affect the productivity of the firm. Considering this, it can be
expected that long implementation time is a potential barrier to implement ERP.
28
3.3.6. Need for expensive hardware/networking equipment The requirement of huge storage devices and networking equipment is generally
considered as one of the main problems associated with the adoption of ERP
systems (Shehab et al., 2004). It can be assumed that most of the SMEs lack the
basic infrastructure needed to implement an ERP system. Moreover, SMEs lack the
money power unlike larger firms (Rao, 2000) and the requirements of expensive
equipment will definitely be a burden on such firms. It can, therefore, be considered
that need for expensive equipment is a potential barrier to implement ERP systems.
3.4. Cultural Barriers
3.4.1. Power centralisation and centralised decision making due to high power distance
A study conducted by Hofstede (1985) revealed that the culture of UAE is
characterised by high power distance. It can, therefore, be assumed that leaders have
almost absolute powers in their companies. Martinsons and Hempel (cited in Peng
and Nunes, 2010a:604) point out that this characteristic of leaders will result in
centralised decisions. It can, however, be argued that top managers are neither
experts of information systems nor regular users of ERP and that their knowledge
and experience is inadequate to make a suitable decision on their own (Peng and
Nunes, cited in Peng and Nunes, 2010b:2-3). This can be considered a potential
barrier because it can result in improper decisions related to the functionality and
capability of the system to be implemented (Peng and Nunes, 2010a).
3.4.2. Not reporting problems/faults because of high power distance ERP implementation requires involvement from the users for it to be successful.
Users should understand the system being implemented and report any problems or
faults associated with the system. UAE being a high power distance society
29
(Hofstede, 1985), staff may be reluctant to report such problems. This can be
considered a barrier as the problems or faults need to be rectified for the successful
implementation of the software. This problem has been discussed by Peng and
Nunes (2010a) in their study about barriers to ERP exploitation in China.
3.4.3. Effect of personal relationships to ensure success in business It is common in the Arab world to give importance to personal relationships while
making important business decisions; referred as Wasta in Arabic (Hutchings and
Weir, cited in Rabaai, 2009:5-6). It is likely that leaders may use personal
relationship to initiate and maintain business relationships. However, it can become
a problem since such business relationships tend to be informal and insecure. If the
ERP vendors are selected using personal relationships, a change in the leadership
may change the relationship with the business partners as well and this may give rise
to a plethora of issues posing a major barrier to the implementation. Peng and Nunes
(2010a) point out a similar problem in Chinese society in their study about barriers
to ERP exploitation in China.
3.4.4. User resistance in using ERP because of cultural misfit between Western and Arabic world
ERP systems are developed mainly based on Western culture which is characterised
by individualism. However, UAE being a collectivist society, people give more
importance to a group rather than an individual (Hofstede, 1985). It is, therefore,
likely that the ERP software will bring about a change in the way people work. As a
result, users may resist to implementation and use of ERP.
3.5. Conclusion ERP implementation is an intensive and time consuming process. There are a
considerable number of factors which affect the successful implementation of ERP
system in an organisation. Since ERP systems are primarily developed for large
30
scale manufacturing firms, its implementation is more challenging for small and
medium sized firms. The barriers in implementing ERP systems can be grouped into
three categories namely organisational barriers, system barriers and cultural barriers.
It is pointed out that often barriers to organisational activities may often exist within
the context of the organisation. Barriers may also arise as a result of technical
limitations or drawbacks of the ERP software. Finally, a set of barriers may arise due
to cultural misfits. A set of twenty one major barriers – 11 organisational barriers, 6
system barriers, 4 cultural barriers – have been identified and discussed. The barrier
ontology is depicted in Figure 2.
31
Organisational Barriers (OB)
ERP implementation barriers
System Barriers (SB)
Cultural Barriers (CB)
OB2: Lack of commitment by top management
OB3: Inadequate change management efforts
OB4: Conflict of interest among different functional units
OB5: Lack of IT expertise
OB6: Unavailability of funds
OB7: Lack of user involvement
OB8: Inadequate user training
OB9: Lack of motivation among employees because of poor PA
OB10: Fear of power/job loss
OB11: Lack of clear strategic goals
OB1: Lack of clear strategic goals
SB1: Non-conformance of the system to organisational needs
SB2: Insufficient support from the consultant
SB3: Insufficient support and services from the system vendor
SB4: Need for extensive customisation of the system to suit business needs
SB5: Long implementation time
SB6: Need for extensive hardware/networking equipment
CB1: Power centralisation and centralised decision making due to high power distance
CB2: Not reporting problems/fault because of high power distance
CB3: User resistance in using ERP because of cultural misfit
CB4: Reluctance in adopting technology
Figure 2: Barrier ontology
32
4. Research Methodology
4.1. Introduction
Research methodology forms the framework for conducting a research. Saunders et
al. (2003:2) refer to the term methodology as “the theory of how research should be
undertaken.” It includes the philosophical and theoretical assumptions upon which
the research is based. A research has many stages which include formulating and
clarifying a topic, critically reviewing the literature, choosing an appropriate
strategy, collecting data using suitable tools, analysing data using proper techniques
and writing up (Saunders et al., 2003).
So as to answer the research questions and accomplish research objectives, the
research philosophy has taken up the principles of positivism with a predominantly
deductive approach. The research strategy is a mixed method approach through the
use of a case study and using a combination of questionnaires and semi-structured
interviews.
4.2. Research Strategy A mixed method approach is used through the use of a case study and using a
combination of questionnaire to collect quantitative data and semi-structured
interview to collect qualitative data. A sequential explanatory strategy is followed in
this study which is characterised by the collection and analysis of quantitative data
followed by the collection and analysis of qualitative data (Creswell, 2003). The idea
of sequential explanatory strategy is to use qualitative data to aid in describing and
interpreting the findings of a primarily quantitative research. One of the main
strengths of this design is its straightforward nature. Moreover, sequential
explanatory strategy is “easy to implement because the steps fall into clear, separate
stages.” (Crewell, 2003:215). In this research, the critical barriers in implementing
ERP systems are identified with the help of a questionnaire. Subsequently, semi-
33
structured interviews are used to explore the causes and consequences of the
identified critical barriers.
A case study is a preferred strategy for doing research which involves a practical
study of a specific current phenomenon within its real life situation using multiple
sources of data. The key benefit of case study approach is that the focus is one or a
few instance which gives in-depth details about the case under consideration. It
supports various research methods and well suits for small scale research projects
(Denscombe, 1998).
4.3. Research Procedure
4.3.1. Quantitative Research In quantitative research, the emphasis is on quantifying the collection and analysis of
data. Numerical data or data that can be converted into numbers are generated as a
result of quantitative research. It demands a deductive approach in relating the
theory and research and the emphasis is on the testing of theories. The main aim of
quantitative research is to establish a relationship between one independent variable
and a dependent variable in a population (Bryman, 2001). Quantitative research is
either descriptive or experimental in nature. Quantitative data can consist of simple
counts such as the frequency of occurrences to more complex data such as test
scores (Saunders et al., 2003). Quantitative analysis techniques are used to analyse
and interpret these data.
4.3.2. Qualitative Research Qualitative research is discovery based, building theory from data rather than
making assumptions about truth and then trying to prove it. Quantitative research is
investigative in nature. It produces in depth and comprehensive information. The
data obtained from qualitative research are the perceptions of the people in the
context (Bryman, 2001). Qualitative researchers use a variety of approaches to
34
collect data (e.g. ethnography, grounded theory, storytelling, shadowing,
phenomenology). Saunders et al. (2003) underline three different aspects of
qualitative research: uses meanings expressed through words, data is non-
standardised and requires classification into categories, analysis done through the
use of conceptualisation. The aim of qualitative research is to seek out understanding
in the same way the participants in the study understand their world.
4.4. Data Collection A combination of questionnaires and semi-structured interviews is used to collect
data. Initially, quantitative data is collected using questionnaires to identify and
establish the main barriers in implementing ERP systems. Subsequently, semi-
structured interviews are used to collect qualitative data to explore the causes and
consequences of the identified barriers.
4.4.1. Questionnaire Questionnaire is the primary data collection method. It is designed to identify and
establish the critical barriers in implementing ERP systems in SMEs in the
construction industry in Dubai. The questionnaire will be based on the barrier
ontology to be built after a critical literature review. The questionnaire will be
designed diligently in order to capture the data required to answer the research
question. The effective creation of a questionnaire needs vigilant planning and
thought and is a much harder task than is generally thought (Bryman, 2001).
4.4.1.1. Questionnaire Design The questionnaire (Appendix I) is designed based on the barriers identified with the
help of a critical literature review. There are three sections in the questionnaire – the
first section is about the benefits of ERP systems, secondly the barriers in ERP
implementation and thirdly information about the respondents. There are a total of
21 barriers namely 11 organisational barriers, 6 system barriers and 4 cultural
barriers. A five point Likert scale is used as the survey scale to analyse and compare
35
the results wherein Strongly Agree being 5 and Strongly Disagree being 1. The
respondents can select any one of the five options namely Strongly Agree, Agree,
Neutral/Don’t know, Disagree and Strongly Disagree. The questionnaire is piloted in
order to ensure its reliability and validity as pointed out by Saunders et al. (2003).
Piloting ensures that the respondents have no issues in answering the questions and
no issues in recording the data. The questionnaire is refined a number of times to
make it simple and easy to read.
4.4.1.2. Questionnaire Administration The questionnaire is sent to the IT Manager of the company by means of email. The
IT Manager will then distribute a hard copy of the questionnaire to all the 40
prospective users of ERP system, including the CEO and MD. Scanned copies of all
the responses will be sent across to the researcher initially and the hard copy will be
sent through via post subsequently.
4.4.2. Semi-structured Interview A semi-structured interview is flexible and allows new questions to be introduced as
the interview progresses (Denscombe, 1998). In a semi-structured interview, the
interviewer generally has a set of themes to be explored and understand what the
interviewees say.
4.4.2.1. Interview Design Semi-structured interviews are conducted to explore the causes and consequences of
the top seven barriers identified with data collected using questionnaire. An
interview instrument consists of a set of themes and questions to be covered in the
interview (Saunders et al., 2003). The questions (Appendix II) are designed in such a
way that the focus of the interview will concentrate only on the top seven barriers
and to bring the interview back on track if the interviewees tend to divert from the
main topic. The first few questions are general in nature in order to get familiarised
with the interviewee and put the interviewee at ease. The questions are designed to
be more specific as the interview progresses. A combination of initiating questions,
follow up questions, trigger questions and closed questions are used in order to
36
explore the causes and consequences of the established barriers. The interviewees
are selected based on their involvement and familiarity with the system under
implementation. All the interviewees are managers as the users are not very familiar
with the system.
4.4.2.2. Interview Administration The interviews are conducted over telephone. Five interviews are planned with the
following personnel of the case company – Senior Manager (Operations), IT
Manager, HR Manager, Finance Manager and Sales Manager. All the three
interviews are recorded with the help of voice recorders for the purpose of
transcribing.
4.5. Data Analysis The quantitative and qualitative data collected as part of the questionnaire and semi-
structured interviews are analysed using corresponding analysis techniques as
detailed below.
4.5.1. Quantitative data analysis A five point Likert scale is used as the survey scale to analyse and compare the
results wherein Strongly Agree being assigned a value of 5 to Strongly Disagree
being 1. A frequency table is created based on the responses and the result is
calculated accordingly. Finally, the mean of each of the barriers is calculated by
dividing the result by the total number of responses.
4.5.2. Qualitative data analysis The data collected through interviews is analysed using a thematic analysis with a
deductive priori coding. Thematic analysis is “a method for identifying, analysing,
and reporting patterns (themes) within data.” (Braun and Clarke, 2006:81).
However, this data driven inductive approach can also be used along with a
deductive priori coding as put forward by Fereday and Muir-Cochrane (2006).
Fereday and Muir-Cochrane (2006:4) point out that this approach “complemented
37
the research questions by allowing the tenets of social phenomenology to be integral
to the process of deductive thematic analysis while allowing for themes to emerge
direct from the data using inductive coding”. The thematic analysis conducted in the
study is based on the principles given by Braun and Clark (2006) and the stages are
given below:
i. Familiarising the data: The interview data is familiarised through the process of
transcription, reading and re-reading it.
ii. Assigning codes to the data: Codes are assigned to the interview data using the
codes already identified with the help of the literature review.
iii. Collating codes into relevant themes: After assigning codes to data, the codes are
organised into the themes which have been identified.
iv. Developing conceptual maps: Based on the themes and codes, a conceptual map
is created to discuss and represent the interview data.
v. Reporting findings: The quotes are further analysed and the analysis is related to
the literature, questionnaire findings and the research questions.
4.6. Conclusion This study uses the principles of positivism with a predominantly deductive
apporach to answer the research questions and accomplish the research objectives.
The research strategy is a mixed method approach through the use of a case study
and using a combination of questionnaires and semi-structured interviews. The
critical barriers is identified and established with the help of questionnaire and the
causes and consequences of the barriers is explored with the help of semi-structured
interviews. The questionnaire response is analysed by creating a frequency table and
mean. The interview data is analysed with the help of thematic analysis with a
deductive priori coding.
38
5. Questionnaire Findings
5.1. Questionnaire Design The questionnaire was designed based on the barriers identified and established with
the help of a critical literature review. There were three sections in the questionnaire
– the first section was about the benefits of ERP systems, secondly the barriers in
ERP implementation and thirdly information about the respondents. There were a
total of 21 barriers namely 11 organisational barriers, 6 system barriers and 4
cultural barriers. A five point Likert scale was used as the survey scale to analyse
and compare the results. The respondents could select any one of the five options
namely Strongly Agree, Agree, Neutral/Don’t know, Disagree and Strongly
Disagree.
5.2. Questionnaire Administration The questionnaire was sent to the IT Manager of the company by means of email.
The IT Manager then distributed a hard copy of the questionnaire to all the 40
prospective users of ERP system, including the CEO and MD. A total of 26
responses were obtained. Scanned copies of all the responses were sent across to the
researcher initially and the hard copy was sent through via post subsequently.
39
5.3. Findings
5.3.1. Gender Out of the 26 respondents, 22 are male and 4 were female employees. The
percentage is as shown in Figure 3. It can be observed that male employees
outnumber female employees.
Figure 3: Gender Chart
40
5.3.2. Age group The age group of the respondents are as shown in Figure 4. It can be noted that a
half of the respondents are of the age group 30-40. There is only one respondent in
the age group Above 50 and there are no respondents in the age group Under 20.
Figure 4: Age group
41
5.3.3. Education level The education levels of the respondents are as shown in Figure 5. It can be observed
that majority of the respondents (42%) possess a bachelor degree. 31% of the
employees have a post secondary qualification. It can be inferred that most of the
respondents have a more than a minimum level of education to perform well and
independently.
Figure 5: Education level
42
5.3.4. Computer skill The computer skills of the respondents are as shown in Figure 6. Almost 77% of the
respondents have intermediate computer skills. It can be assumed that most of the
employees do not find difficulty in using computers.
Figure 6: Computer skill
43
5.3.5. Benefits of ERP Systems The main benefits of ERP systems were investigated by asking the respondents to
rate the benefits on a five point Likert scale ranging from Strongly Agree (5) to
Strongly Disagree (1). A frequency table was created based on the responses and the
mean of the benefits calculated accordingly. The results are as shown in Table 1.
Benefits of ERP Strongly Agree Agree
Neutral/Don't know Disagree
Strongly Disagree Mean
Increases productivity 11 13 2 0 0 4.346 Better management of resources 8 16 2 0 0 4.231 Improves customer service 6 18 2 0 0 4.154 Better decision making and planning 6 18 2 0 0 4.154 Reduces operating cost 5 19 2 0 0 4.115 Improves performance 4 20 2 0 0 4.077 Supports business growth 4 19 3 0 0 4.038 Facilitates management and organisation in the company 4 18 3 0 0 3.885 Reduces IT cost 1 16 5 3 0 3.462
Table 1: Benefits of ERP
It can be observed that more than 80% of the respondents agree with all the above
mentioned benefits of ERP systems. The top five results reflect that users consider the
cost) and managerial (i.e. better management of resources and better decision making
and planning) benefits of ERP systems rather than strategic benefits of ERP (supports
business growth and improves performance) that may occur in the long run. However,
around 11% of the respondents disagree that ERP systems reduces IT cost. This may be
due to the lack of awareness about ERP systems.
44
5.3.6. Major barriers in implementing ERP systems The major barriers in implementing ERP systems were investigated by asking the
respondents to rate each of the 21 potential barriers, under the categories namely
organisational barriers, system barriers and cultural barriers. The barriers were
measured on a Likert five point scale ranging from Strongly Agree (5) to Strongly
Disagree (1).
5.3.6.1. Organisational barriers Table 2 shows the results for organisational barriers.
Organisational Barriers Strongly Agree Agree
Neutral/Don't know Disagree
Strongly Disagree Mean
Inadequate change management efforts 3 19 4 0 0 3.962 Lack of clear strategic goals 2 20 4 0 0 3.923 Lack of commitment by top management 2 20 4 0 0 3.923 Lack of motivation among employees because of poor performance appraisal 2 20 4 0 0 3.923 Conflict of interest among different departments/functional units 4 16 5 1 0 3.885 Low skilled staff 1 21 4 0 0 3.885 Unavailability of funds 2 18 6 0 0 3.846 Lack of user involvement 1 19 5 1 0 3.769 Fear of loss of power and/or loss of job 1 19 5 1 0 3.769 Reluctance to adopt technology 1 19 5 1 0 3.769 Inadequate user training 1 18 4 3 0 3.654 Lack of IT expertise 0 14 9 3 0 3.423
Table 2: Organisational barriers
The results show ‘Inadequate change management efforts’ as the most agreed
organisational barrier by the respondents. It reflects the lack of effort from the
management to adopt proper change management techniques. The reason for this
may be the lack of awareness about proper change management among the top
management. It can be inferred from the results that the respondents find it difficult
45
to cope up with the changes to be introduced by the ERP system and consider it as a
major barrier. As pointed out by Umble et al. (2003), inadequate change
management efforts make the employees unprepared for the changes to be brought
about by the ERP system. More than 70% of the respondents agree with all the
above mentioned organisational barriers except for ‘Lack of IT expertise’. Moreover,
some of the respondents disagree with the fact that ERP systems reduces IT cost
5.3.6.2. System barriers The results of system barriers are as shown in Table 3.
System Barriers Strongly Agree Agree
Neutral/Don't know Disagree
Strongly Disagree Mean
Non-conformance of the system to organisational needs 4 18 4 0 0 4.000 Long implementation time 6 14 6 0 0 4.000 Insufficient support from the Consultant 5 16 4 1 0 3.962 Insufficient support and services from system vendor 4 16 5 1 0 3.885 Need for extensive customisation of the system to suit business needs 4 16 5 1 0 3.885 Need for expensive hardware/networking equipment 2 16 7 1 0 3.731
Table 3: System barriers
The respondents rated ‘Non-conformance of the system to organisational needs’ and
‘Long implementation time’ as the major system barriers. It is noted that the ERP system
available in the market do not suit the requirements of construction firms (Shi and
Halpin, 2009). ERP implementation is an intensive and time consuming process (Al-
Mashari et al., 2003; Mabert et al., 2003; Umble et al., 2003). As user involvement is
required during the implementation of ERP, employees may find it difficult to dedicate
to time for it if the implementation continues for a longer period of time. However,
around 70% of all the respondents agree with all the above mentioned system barriers.
46
5.3.6.3. Cultural barriers Table 4 shows the results for cultural barriers.
Cultural Barriers Strongly Agree Agree
Neutral/Don't know Disagree
Strongly Disagree Mean
Power centralisation and centralised decision making due to high power distance 2 15 8 1 0 3.692 Not reporting problems/faults because of high power distance 2 15 8 0 0 3.615 Effect of personal relationships to ensure success in business (known as Wasta in Arabic) 0 1 23 2 0 2.962 User resistance in using ERP because of cultural misfit between Western and Arabic world 0 0 24 2 0 2.923
Table 4: Cultural barriers
The results show ‘Power centralisation and centralised decision making due to high
power distance’ as the main cultural barrier. It can be observed that the ratings for
cultural barriers are comparatively low. It may be either due to the lack of awareness
of cultural impacts on ERP implementation or they do not believe it to be a potential
barrier in implementing ERP systems. However, majority of the respondents believe
that centralised decision making of leaders can be a potential barrier to ERP
implementation. The result is relevant as Peng and Nunes (cited in Peng and Nunes,
2010b:2-3) point out that top management may lack the knowledge about
information systems to make a suitable decision on their own.
5.4. Top seven major barriers Based on the responses received, a frequency table was created and the mean of the
barriers calculated accordingly. Out of the twenty one barriers, the top seven barriers
were identified based on the mean value is shown in Table 5.
47
ERP implementation barriers Mean Non-conformance of the system to organisational needs 4.000 Long implementation time 4.000 Inadequate change management efforts 3.962 Insufficient support from the Consultant 3.962 Lack of clear strategic goals 3.923 Lack of commitment by top management 3.923 Lack of motivation among employees because of poor performance appraisal 3.923
Table 5: Top seven barriers
The results show that most of the users perceive ‘Non-conformance of the system
to organisational needs’ as the major barrier to implement ERP systems. The
result is consistent with the study of other researchers (e.g. Shi and Halpin, 2003;
Chung et. al, 2009) who highlight that the project specific nature and non-
standard work processes in the construction industry make it difficult for the
ERP systems available to suit the needs of construction firms.
Out of the top seven barriers, four are organisational barriers (Inadequate change
management efforts, Lack of clear strategic goals, Lack of commitment by top
management, Lack of motivation among employees because of poor
performance appraisal) and three are system barriers (Non-conformance of the
system to organisational needs, Long implementation time, Insufficient support
from consultant). It is evident from the results that organisational barriers are
more critical than system barriers. The system barriers are in one way connected
to the organisational barriers as the organisation is responsible for selecting the
system.
The barriers expressed by the results were mainly functional in nature. The top
seven barriers consist of three system barriers (Non-conformance of the system
to organisational needs, Long implementation time, Insufficient support from the
48
Consultant) and four organisational barriers (Inadequate change management
efforts, Lack of clear strategic goals, Lack of commitment by top management,
Lack of motivation among employees because of poor performance appraisal).
Organisational barriers, as mentioned above, reflect the short term strategy of the
top management. Moreover, it reflects the lack of awareness among the top
management about ERP implementation.
5.5. Conclusion A questionnaire was designed based on the twenty one potential ERP
implementation barriers identified and established through a critical literature
review. The questionnaire was sent to forty prospective users of the system and
twenty six responses were received. The questionnaire was analysed by creating a
frequency table and the mean of all the barriers were calculated. The results for each
of the three categories of barriers namely organisational barrier, system barrier and
cultural barrier are discussed further. Based on the mean value of each of the
barriers, the top seven critical barriers are chosen in order to explore the causes and
consequences of each of them. The barriers will be explored with the help of semi-
structured interviews and the findings of the interviews are discussed in the next
chapter.
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6. Interview Findings
6.1. Interview Design Semi-structured interviews were conducted to explore the causes and consequences
of the top seven barriers identified with data collected using questionnaire. A set of
open ended and closed ended questions were designed to collect detailed data about
all the seven critical barriers. The questions were designed in such a way that the
focus of the interview would concentrate only on the top seven barriers and to bring
the interview back on track if the interviewees tend to divert from the main topic.
The first few questions were general in nature in order to get familiarised with the
interviewee and put the interviewee at ease. The questions were designed to be more
specific as the interview progresses. The interviewees were selected based on their
involvement and familiarity with the system under implementation. All the
interviewees were managers as the users were not very familiar with the system.
6.2. Interview Administration The interviews were conducted over telephone. Initially, five interviews were
planned with the following personnel of the case company – Senior Manager
(Operations), IT Manager, HR Manager, Finance Manager and Sales Manager.
However, Senior Manager (Operations) and Finance Manager were not available
during the period of interview. All the three interviews were recorded with the help
of voice recorders for the purpose of transcribing.
6.3. Analysis The interviews conducted were first transcribed with the help of the audio recording
of the conversation. The data was then analysed using a thematic analysis with
deductive priori coding.
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6.4. Findings
6.4.1. Benefits of ERP systems The interviewees emphasised on the following benefits of ERP systems
• Facilitates management and organisation in the company
• Better decision making and planning
• Improves performance
• Supports business growth
According to the Sales Manager, “ERP could improve the efficiency in day-to-day
operations as well as it would help us to do better planning and take better
management decisions”. The HR Manger opined that
“the system would help us bringing in a control mechanism and bring about a logical
process workflow…any firms looking for advancement of result has to have IT
imbibed within it and this is a means of, you know, our first step towards the future
and it is a long term strategy.”
From the above quotations, it is clear that the management focus not only on the
managerial and operational benefits of ERP but also on the organisational (facilitates
management and organisation in the company) and strategic benefits (supports
business growth) of ERP. Moreover, the management consider ERP implementation
as a long term strategy.
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6.4.2. Top seven barriers in implementing ERP systems The top seven barriers in implementing ERP systems was identified and established
after analysing the responses to the questionnaire. The mean of all the twenty one
major barriers were calculated based on the questionnaire response. The top seven
barriers were identified based on the value of mean. The top seven barriers are as
below:
Non-conformance of the system to organisational needs
Long implementation time
Inadequate change management efforts
Insufficient support from the Consultant
Lack of clear strategic goals
Lack of commitment by top management
Lack of motivation among employees because of poor performance appraisal
6.4.2.1. Non-conformance of the system to organisational needs
As discussed in section, non-conformance of ERP systems to organisational needs is
a common problem in the construction industry (Shi and Halpin, 2003; Chung et al.,
2009).
All the three interviewees agreed that this is a major barrier in implementing the
ERP system. The IT Manager of the company commented:
“We are implementing several modules like Sales, Procurement, Finance,
HRMS, Workshop and Maintenance, Inventory and Job contracting. This is a
main problem for job contracting module. Our work is project-specific and it
depends on the site. The ERP system cannot match all aspects of our work. And
this resulted in extensive customisation of the system for this particular module.”
This fact was confirmed by the Sales Manager who mentioned:
52
“Yes, it happens. If you have a module which isn’t implemented or which isn’t a
feature of the ERP system, it could be a major barrier. In the system we’re
implementing, the piling process was never integrated. So it is a kind of obstacle
in implementing the system.”
Moreover, the quotations clearly show that the main cause for this is the project-
specific nature of work as pointed out by Shi and Halpin (2003) and Chung et al.
(2009).
It emerged from the interview that this barrier caused considerable delay to the
project. According to the IT Manager:
“There was a huge difference between the requirements we conveyed to the
consultant during the mapping time and what he conceived. The consultant is not
able to understand what type of business we do. So he mapped something and it
doesn’t match with our business and again he remapped the whole thing and it
took a lot of time.”
The Sales Manager agreed with this and commented:
“It is one of the reasons that is delaying the implementation of ERP because the
consultant take a large amount of time to understand the process; to implement it
and to test it and it has been going on for a while.”
From the results, it is clear that non-standard work processes and project-specific
nature or work are two major issues which makes ERP implementation in
construction firms a more challenging task.
53
6.4.2.2. Long implementation time It is well known that ERP implementation is an intensive and time consuming
process (Al-Mashari et al., 2003; Mabert et al., 2003; Umble et al., 2003). The
interviewees confirmed that this is a major issue for the company. The HR Manager
commented:
“See, time is money. The time that we have to keep aside, bringing in our users
to understand the system and testing it, training, everything takes a lot of time.
And this is the time we have to be productively putting into work.”
The Sales Manager added:
“This is a major drawback. As it spans across time, it consumes more of the
employee time because the consultant need constant feedback and updates from
the employees. So the longer it goes, the longer it consumes our man hours.”
It is obvious from the above statements that productivity loss is a major concern
during the ERP implementation process. The project may get ramped up before
completion if the implementation takes much longer time as it considerably affects
the productivity of the company. Moreover, the IT manager mentioned “most of the
management team is well aware of the long implementation time of ERP but some
staff are getting frustrated because of this.” This may in turn result in loss of co-
operation from the employees. Altogether, it emerged from the interview that long
implementation time is a major issue in implementing the ERP system.
6.4.2.3. Inadequate change management efforts As discussed in section, a good change management effort is required in order to
harness the opportunities provided by ERP systems (Umble et al., 2003). From the
interview, it emerged that lack of proper change management techniques can give
rise to some critical issues. The Sales Manager mentioned that “we have been given
54
some information about the system but I don’t think we had a better change
management process”. According to the HR Manager:
“See, we are not a firm that has really grown and if you ask about change
management, it is a huge term for us to handle at this point of time. Little by
little we are trying to adjust and trying to accommodate the system. People at our
firm, when they first heard about ERP system, they were really scared. They
thought it is an employee reduction programme. We had to make them
understand that they are not being made redundant and that it is just going to
help them and that takes more time and effort and patience on the part of the
management. So that is a change management effort because we have to
convince our employees. If you look at it in that perspective, yes, change
management is being done. But on a very strictly HR perspective of change
management, I would say no.”
It is clear from the above quotations that very little efforts have been made in terms
of change management. It can be inferred that there is lack of awareness about the
importance of proper change management techniques. Moreover, it can be assumed
that the employees are not prepared for the changes that the ERP implementation
would brought about which can result in resistance in using the system by the
employees (as discussed in section). Therefore, this can be a major barrier in the
successful implementation of the system.
6.4.2.4. Insufficient support from consultant Consultants play a crucial role in the quality and progress of the system
implementation (Chung et al., 2008) and to educate the user company about ERP
implementation (Peng and Nunes, 2010a). The IT Manager mentioned:
“During the time of implementation, the consultant has changed four times. We had
to explain the whole thing to each consultant and we lost a lot of time in doing this
and the project got delayed. The support from the vendor itself was less”
The HR Manager also commented similarly:
55
“See, when you are actually getting a vendor coming to your place and get
something installed or implemented, you expect the complete support of the firm
with one consultant. But here we have seen multiple changes, four or five
consultants coming in. So the flow gets lost. At least when I look at it from my
perspective the project got delayed considerably due to lack of support from the
vendor themselves.”
It is evident from the above statements that lack of support from the consultant
delayed the project. Moreover, it is clear that lack of support from the consultant is
due to the lack of support from the vendor.
6.4.2.5. Lack of clear strategic goals It is imperative that firms should have clearly defined their strategic goals before the
implementing ERP systems. Al-Mashari et al. (2003) highlight that lack of clear
direction and planning makes an ERP implementation suffer a huge failure. From
the interviews, it is evident that the goals were not clearly defined. The IT Manager
commented:
“No, it was not clear. Actually when we started, the business flow was not
thorough for our users. When we explained it to the vendor it was incomplete.
As a result, there was much gap when the vendor presented the initial product
with our business flow. During the requirements gathering process, no one from
the senior management participated, only the basic users gave the inputs. So
there was lack of clarity on both company and vendor sides.”
The HR Manager added: “The users first of all did not understand what was
happening. If we had taken it a little slowly or I would say if we had planned it
better, it would have helped us more”. From the above statements, it is clear that
there is a lack of clear vision and business needs. As a consequence, there is a lack
of focus and also it delayed the implementation. It can be inferred that lack of clear
56
strategic goals can eventually lead to the failure of the project, therefore, can be
considered a crucial barrier.
6.4.2.6. Lack of commitment by top management Senior management involvement is required throughout the ERP implementation
process in order for it to be successful (Mabert et al., 2003). Moreover, Gupta (2000)
points out that top management involvement helps to reduce resistance from the
users. According to the Sales Manager,
“The top management actually made the decision to go for the ERP
implementation but later it was handed over to our in-house ERP consultant. I
think after that point the involvement by the top management is minimal and it
had been taken forward by the ERP consultant. We had an information session,
by the consultant, about ERP but not directly by the top management.”
The IT Manager commented: “The CEO does not involve in the implementation
process. He just conveys messages either through me or another manager.” The
statements clearly suggest that there is a lack of support from the top management. It
may be because of the lack of awareness among the top management about ERP
implementation.
6.4.2.7. Lack of motivation among employees because of poor performance appraisal
A successful ERP implementation requires full support from the users (Rao, 2000).
In order for the employees to have greater commitment to the organisation, there
needs to be an effective appraisal process (Behery and Paton, 2008). Employees
would rather lose their interest in work if there is no proper system for appraisal.
It emerged from the interview that there is no proper appraisal system and that the
users do not provide their support. The IT mentioned that
57
“Actually there is no system as such for appraisal. It depends upon the seniority
and not on the performance. One important thing is users are not dedicating that
much time for looking into the product and understanding it. Moreover, they are
not giving much input.”
It can be inferred from the above statement that there is a lack of motivation among
the employees and that appraisal system has an important role in motivating the
employees. The lack of support from the users is a crucial problem for ERP
implementation and as such ‘Lack of motivation among the employees because of
poor performance appraisal’ can be considered a major barrier in implementing ERP
systems.
6.5. Discussion and Conclusion It can be observed that the questionnaire and interview data emphasise different
benefits of ERP systems. The respondents to the questionnaire agree more with the
operational and managerial benefits of ERP systems whereas the interview data
reflects the strategic, managerial and organisational benefits of ERP. It can,
therefore, be assumed that the benefits of ERP systems are not conveyed to the
employees properly by the top management. Moreover, it reflects a lack of
commitment from the top management towards the implementation of ERP system.
All the top seven barriers identified with the help of questionnaire data was agreed
by the interviewees. The interviews shed light on the causes and consequences of
each of the seven barriers. Apart from the top seven barriers identified with the help
of questionnaire, one of the major barriers that came up during the interview was
‘Fear of loss of power and/or loss of job’. The IT Manager commented that “Most of
our employees didn’t know what the use of ERP is and they felt that it is an
(E)mployee (R)eduction (P)rogramme and there was resistance from users because
of this.” It is evident from the above quotation that users resist the implementation of
ERP. The resistance from users can be linked to lack of awareness about ERP. It
58
also suggests the lack of commitment from the top management to assure the
employees about the benefits of ERP. The concept map depicting the top seven
barriers, its causes and consequences are shown below (Figure 7).
The questionnaire results show that respondents are either neutral or unaware about
the cultural misfits to be brought about by the ERP system. The Sales Manager
commented:
“I don’t think there is a big cultural shift in terms of technology. Most of our
workforce is from Asian countries like India and they are pretty happy to use
technology. Moreover, the Arabs are so happy to accept new technologies. In
this country they have all the advanced technology implemented right now. So
there won’t be any cultural barriers in terms of technology.”
Even though it is evident from the above statement that cultural misfit has not much
an impact on the implementation process, there is a chance that users start realising
about the situation once they start using the system fully. It may eventually affect the
successful implementation of the system.
It emerged from the interviews that most the top seven barriers directly or indirectly
delayed the implementation process. Delay in implementation can have adverse
impact on the organisation (e.g. decrease in productivity) and frustration and non-
cooperation from users. Moreover, it is evident that there is a lack of awareness
about ERP implementation not only among users but also among senior
management. It can, therefore, be established that the identified top seven barriers
can have adverse effect on the implementation of ERP systems.
59
Organisational Barriers
Non-conformance of the system to organisational needs
Non-standard work processes
Software cannot match the needs of organisation
System Barriers
Project specific nature of work
Need for extensive customisation
Delay in implementation
Long implementation time
Frustration among users
Need for more man hours
Reduction in productivity
Inadequate change management
Lack of awareness about change management Staff not prepared
for the impending changes
Insufficient support from the consultant
Incomplete business flow
Lack of clear strategic goals
Lack of clear vision and business needs
Lack of focus
Lack of commitment from top management
Poor performance appraisal system
Lack of motivation among employees
Lack of support from users
Fear of job/power loss
Delay in implementation
Insufficient support and services from the vendor
Delay in implementation
Lack of awareness about ERP
Resistance from users
Lack of awareness about ERP
Top 7 barriers
Figure 7: Conceptual map of interview data
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7. Conclusion and Recommendations
7.1. Conclusion This study identified and explored the causes and consequences of the critical barriers in
implementing ERP systems in SMEs in the construction industry in Dubai by means of a
case study conducted at National Group in Dubai.
Research Question A:
What are the barriers faced by SMEs in the construction industry in Dubai in
implementing ERP systems?
With the help of the questionnaire, the critical barriers in implementing ERP systems in
SMEs in the construction industry in Dubai have been identified. The results show
organisational barriers and system barriers as more critical in successfully implementing
ERP systems. The results reflect the importance of organisational readiness before and
during the implementation of the ERP system. Organisations adopting ERP systems
should have clear strategic goals and business needs. Moreover, the top management
support is required from the beginning till the end of the entire project. The main system
barrier is the inability of the ERP systems to meet the requirements of the construction
industry as discussed in the literature. Therefore, utmost importance is needed while
selecting a system.
Research Question B:
What are the causes of these ERP implementation barriers and its consequences?
The causes and consequences of the implementation barriers were explored with the help
of semi-structured interviews. Interview findings confirm that non-conformance of ERP
system to organisational needs as a critical barrier in implementing ERP systems.
Moreover, interview data emphasises the importance of organisational readiness. It is
observed that lack of focus due to lack of clear strategic goals as the reason for most of
the implementation barriers. Due to the lack of clear strategic goals, the project can go out
of track right from the selection of the vendor. Moreover, there is a lack of awareness
about ERP implementation among the top management and lack of top management
61
support affects the progress of the implementation project. It is important while selecting
the system that it meets the requirements of the organisation and also the system vendor
needs to have sufficient domain knowledge. It is observed that SMEs lack the awareness
about the importance of change management while implementing an intensive project like
ERP implementation. It can be concluded that that all the identified barriers is one way or
other way related to the lack of planning and clear vision about ERP implementation and
the perceived business needs. All the barriers can eventually delay the progress of the
implementation process which in turn can affect the successful completion of the ERP
implementation.
7.2. Recommendations From the conclusions made above, the researcher has arrived at the following set of
recommendations for SMEs in the construction sector embarking for ERP
implementation.
ERP implementation is an intensive process which takes considerable time and resources
for its successful completion. The top management of firms adopting ERP systems should
have clear vision and well defined business needs before embarking to this endeavour.
The top management should also acquire sufficient knowledge about ERP
implementation and need to extend their support throughout the project. Moreover, the
top management should also assure the benefits of ERP systems to the employees so as to
reduce the resistance from them.
Since the ERP systems available in the market are primarily developed for manufacturing
firms, it may be difficult for the construction firms to meet their requirements with those
systems. In order to reduce further complexities, care should be taken while selecting an
ERP system. Moreover, it is important for the selected ERP system vendor to have
sufficient domain knowledge. Proper change management techniques should be used to
ensure that the employees are properly educated about the ERP system being
implemented and also to prepare them for the impending changes to be brought about by
the system
62
ERP implementation requires full cooperation and inputs from users. If the employees do
not have commitment towards the organisation, it will affect the quality of their work.
The top management should employ proper appraisal techniques in order for the
employees to be motivated and perform well.
7.3. Research Limitations One of the main drawbacks of this research is that it employed a single case study
method. Therefore, the generalisation of the results of this study is less authoritative.
Even though the case company is a Small and Medium sized enterprise in the
construction sector, it may present the whole construction industry in Dubai.
The other drawback of this study is the relatively small sample size. Since the case
company is a SME, the number of ERP users are less.
7.4. Further Research Since the study was based on a single case study method, further empirical research of the
same type is indeed required. The further research can be carried out in a much wider
scope so as to generalise the result more correctly. Moreover, currently there is a lack of
literature about ERP implementation in SMEs in the construction industry and further
research is certainly needed to gain more insights.
63
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