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Implementing Enterprise Resource Planning (ERP) systems is a complex, lengthy and expensive process which usually faces serious challenges and failures. Thus, it is necessary to perform a readiness assessment at the initial stage of an ERP implementation project to identify weakness areas which may encounter the project with failure. This paper proposes a new framework for assessing readiness of an organization to implement the ERP project on the basis of McKinsey 7S model using confirmatory factor analysis. Through this method, the construct of ERP readiness is proposed based on 7 dimensions namely “structure”, “strategy”, “systems”, “skills”, “style/culture”, “staff”, and “shared values/ superordinate goals”. Using the framework, the current situation of the organization can be determined and necessary changes can be made prior to system implementation. The proposed framework is then applied to 2 real Iranian banking cases and the advantages of the framework over available frameworks are illustrated.
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International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 23
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Keywords: ConrmatoryFactorAnalysis(CFA),CriticalSuccessFactors(CSFS),EnterpriseResource
Planning(ERP),ERPReadinessAssessment(ERA),McKinsey7SModel,Multidimensional
Constructs
INTRODUCTION
ERP systems are described as “computer-based
systems designed to process the transactions of
an organization and facilitate integrated and
real-time planning, production, and customer
response” (O’Leary, 2000). These systems are
designed to address the problem of fragmenta-
tion as they integrate and streamline internal
processes by providing a suite of software
modules that cover all functional areas of a
A McKinsey 7S
Model-Based Framework for
ERP Readiness Assessment
PayamHanazadeh,AllemehTabataba’iUniversityofTehran,Iran
AhadZareRavasan,AllemehTabataba’iUniversityofTehran,Iran
ABSTRACT
ImplementingEnterpriseResourcePlanning(ERP)systemsisacomplex,lengthyandexpensiveprocesswhich
usuallyfacesseriouschallengesandfailures.Thus,itisnecessarytoperformareadinessassessmentatthe
initialstageofanERPimplementationprojecttoidentifyweaknessareaswhichmayencountertheproject
withfailure.Thispaperproposesanewframeworkforassessingreadinessofanorganizationtoimplement
theERPprojectonthebasisofMcKinsey7Smodelusingconrmatoryfactoranalysis.Throughthismethod,
theconstructofERPreadinessisproposedbasedon7dimensionsnamely“structure”,“strategy”,“systems”,
“skills”,“style/culture”,“staff”,and“sharedvalues/superordinategoals”.Usingtheframework,thecur-
rentsituationoftheorganizationcanbedeterminedandnecessarychangescanbemadepriortosystem
implementation.Theproposedframeworkisthenappliedto2realIranianbankingcasesandtheadvantages
oftheframeworkoveravailableframeworksareillustrated.
business (Koch, Slater, & Baatz, 2001). Al-
though, ERP systems can bring many benefits
to organizations, the high failure rate is a ma-
jor concern (Davenport, 1998). It is said that,
about 70 percent of ERP implementations fail
to deliver anticipated benefits (Al-Mashari,
2000) and three quarters of these projects are
unsuccessful (Griffith, Zammuto, & Aiman-
Smith, 1999; Hong & Kim, 2002; Kumar,
Maheshwari, & Kumar, 2003). These projects
are on the average 178% over budget, took 2.5
times longer than intended and deliver only 30%
of the promised benefit (Zhang, Lee, Huang,
DOI: 10.4018/jeis.2011100103
24 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011
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Zhang, & Huang, 2005). These statistics imply
that ERP projects are one of the most difficult
system development projects. To avoid such
costly failures, much effort has been done by
researchers. Some researchers have provided
valuable insights into the process of ERP imple-
mentation (Holland & Light, 1999; Mandal &
Gunasekaran, 2002; Motwani, Mirchandani,
Madan, & Gunasekaran, 2002; Soja, 2008;
Subramanianh & Hoffers, 2005; Wang, Shih,
Jiang, & Klein, 2008; Yusuf, Gunasekaran, &
Abthorpe, 2004) and others have identified
a variety of critical factors affecting either
on success (Al-Mashari, 2003; Hanafizadeh,
Gholami, Dadbin, & Standage, 2010; Nah &
Delgado, 2006; Nah, Zuckweiler, & Lau, 2003;
Zarei & Naeli, 2010; Zhang et al., 2005) or
failure (Aladwani, 2001; Amoako-Gyampah &
Salam, 2004; Bradford & Florin, 2003; Hong
& Kim, 2002; Somers & Nelson, 2004; Umble
& Umble, 2002) of ERP projects.
Considering the importance of ERP, some
works conducted in this area are reviewed
here. Esteves and Pastor (2001) in their work
summarized and grouped ERP literature until
2000 according to what they term as “the ERP
lifecycle framework”. The lifecycle consisted
of adaption, acquisition, implementation, usage
& maintenance, evolution, and retirement (Es-
teves & Pastor, 2001). They showed that most
of the literature published prior to 2000 focused
on implementation approaches. Other studies
conducted considering categories proposed by
Esteves and Pastor (2001) approved these results
and suggested that literature on implementa-
tion dominates others, i.e., 38% of total papers
published between 2000- 2005. According to
the results, just 2% of all papers devoted to
studies on adaption phase (Dery, Grant, Harley,
& Wright, 2006). So, it is clear that there is a
dearth of studies in the pre-implementation
phases such as ERP selection, readiness assess-
ments, ERP acquisition planning, etc.
This paper, as a potential contribution to
knowledge, is intended to consider the subject
of ERP Readiness Assessment (ERA). Such
an assessment determines the current state of
organization’s readiness to implement an ERP
system besides identifying the weakness areas
which must be improved prior to later stages.
Thus, the aim of this paper is introducing the
concept of ERA and developing and validating
a practical framework for such an assessment.
In practice, the results of the paper would en-
able managers to achieve a comprehensive
understanding of ERP project and help them to
make a proper decision on initiating the ERP
project. In addition, they would be aware of their
weakness areas prior to project implementa-
tion. Therefore, they can effectively manage
the potential risks and costs associated with
the project and avoid most of the challenges
in later stages of the implementation.
LITERATURE REVIEW
Two basic elements of the present research are
the ERA and the McKinsey 7S model which are
well described. Also, a brief review on avail-
able renowned models in the field is presented.
Finally the most important factors in ERA are
extracted from the most relevant literature and
the conceptual framework is developed based
on these factors.
ERP Readiness Assessment
Failures of ERP implementation can be caused
by multiple factors. But, studies suggest that
failure is largely due to organizational and
social, rather than technical factors (Fitzgerald
& Russo, 2005). However, there are extensive
challenges in the implementation of ERP sys-
tems which sometimes turn the project into a
complete failure. These challenges affect the
success of ERP project in the implementation
stage and must be identified at the beginning
of the project to avoid potential risks in latter
stages. Thus, it would be necessary to assess
and analyze the preparedness of an organization
before initiating the project. Without proper
readiness, the project probably fails or faces
intensive challenges. That’s why ERA is usually
introduced as a separate stage for ERP projects
which must necessarily be conducted prior to
project kick-off (Leon, 2007). The success of
International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 25
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an ERP implementation greatly depends on the
state of readiness of the company. Higher assess-
ment scores indicate higher level of readiness
that enhances the likelihood of achieving suc-
cess in the project (Razmi, Sangari, & Ghodsi,
2009). Such an assessment not only identifies an
organization’s current capability to implement
an ERP project, but also identifies weakness
areas that must be improved to achieve a bet-
ter state of readiness for ERP implementation.
McKinsey 7S Model
The McKinsey 7S Model was developed in
the early 1980s by Tom Peters and Robert
Waterman, two consultants working at the
McKinsey& Company consulting firm and has
been used to analyze over 70 large organiza-
tions, since then. The model was created as a
recognizable and easily remembered model in
business. The seven variables, which the authors
termed “levers” all beginning with the letter
“S” include “structure”, “strategy”, “systems”,
“skills”, “style”, “staff”, and “shared values/
superordinate goals” (Peters & Waterman,
1982). Table 1, summarizes the definition of
the model elements.
It is believed that for long-term benefit,
these variables should be changed to become
more congruent as a system. Effective organi-
zations achieve a fit between these seven ele-
ments. These elements are categorized in so-
called hard S’s and soft S’s. The hard elements
(strategy, structure, and systems) are feasible
and easy to identify. The four soft S’s (shared
values, skills, staff, and style) however, are
hardly feasible. The external environment is
not mentioned in the McKinsey 7S model, al-
though the authors do acknowledge that other
variables exist and that they depict only the
most crucial variables in the model (Peters &
Waterman, 1982). The main sources of aca-
demic work on the 7S model (Pascale & Athos,
1981; Peters & Waterman, 1982; Waterman,
Peters, & Phillips, 1980) can be used for more
studies about the model.
Regarding the high capability of the 7S
model to give a comprehensive view of every
organization, authors have exploited the model
in developing their conceptual framework. This
would help them have a proper and comprehen-
sive look on organizational diverse dimensions
and their associated factors.
Table1.DefinitionoftheelementsofMcKinsey7Smodel(Peters&Waterman,1982)
Dimension Definition
Strategy Actions a company plans in response to changes in its external environment
Structure Basis of specialization and co-ordination influenced primarily by strategy, size, and diversity
of organization
Systems Formal and informal procedures that support the strategy and structure
Style / Culture Consisting of two components as below:
• Organizational culture: the dominant values, beliefs, and norms which develop over time
and become relatively enduring features of organizational life.
• Management style: more a matter of what managers do than what they say; how do com-
pany managers spend their time; what are they focusing on
Staff The people/human resource management- processes used to develop managers, socialization
processes, and ways of introducing young recruits to the company
Skills The distinctive competences- what the company does best
Shared Values Guiding concepts, fundamental ideas around which a business is built- must be simple, usu-
ally stated at abstract level, have great meaning inside the organization even though outsiders
may not see or understand them.
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Related Works
There are some ERP or enterprise system (ES)
readiness assessment frameworks proposed
either by practitioners or scholars, but the scope
of this part is limited to only those frameworks
that were peer-reviewed or scholarly and pub-
lished widely in the literature. Hence, through
an exhaustive literature review, the most related
frameworks are identified as below:
BEST Framework
The BEST (Better Enterprise SysTem imple-
mentation) framework, used for analyzing
CEAO (cause–event–action–outcome) chain, is
based on a process-based model of organizations
(Wognum, Krabbendam, Buhl, Ma, & Kenett,
2004). The BEST assessment tool is aimed at
analyzing the preparedness of an organization at
the start of an enterprise system implementation
project. This framework has 3 dimensions of
permanent business process, design and tun-
ing of the new enterprise system, and project
management. Furthermore, there are 6 aspects
in the framework, namely strategy and goals,
management, structure, process, knowledge and
skills, and social dynamics. A total of 264 CEAO
chains have been gathered through 24 case
studies and have been analyzed and classified
into the reference framework cells (Wognum et
al., 2004). The framework is developed for use
in all kinds of ESs rather than specific ERPs.
Razmi’s Framework
This framework has 3 aspects as the main ar-
eas of ERP readiness. That is, organizational
readiness, project management readiness, and
change management readiness. Also, 15 factors
are identified as the assessment factors and
are classified into five categories as “project”,
“vision and goals”, “systems and processes”,
“culture and structures”, and “human resources”
illustrated in Table 2. The global weights of the
categories and factors are calculated using fuzzy
ANP algorithm. Finally, the proposed model
has been applied in financial affairs department
of an Iranian power holding company (Razmi
et al., 2009).
Raymond’s Framework
The framework is proposed for evaluating the
level of readiness for ERP adoption in manu-
facturing SMEs. It has 4 dimensions including
Table2.CategoriesandfactorsofRazmi’sframework(Razmietal.,2009)
Categories Factor
Project • Project championship
• Resource allocation
• Assign responsibilities
• Project team
• Project scope
Vision and Goals • ERP implementation vision
• ERP mission and goals
Systems and Processes • Existing systems
• Existing processes
Culture and Structures • Culture
• Decision mechanism
• Organizational structure
• Communication
Human Resources • Top management
• Personnel
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organizational context, external forces, percep-
tion of ERP, and business processes with 13
associated factors. Through a field study of 11
manufacturing SMEs, the framework classified
these firms in three clusters of “committed
adopters”, “uncommitted adopters”, and “late
adopters” (Raymond, Rivard, & Jutras, 2006).
Each dimension and their related factors are
listed in Table 3.
By reviewing the presented frameworks,
one can infer that they concentrate on some
important factors, while overlooking some
others. For example, BEST framework does
not consider technological issues in ES imple-
mentations, besides it is not customized for
ERPs. Razmi’s framework does not have any
factor for assessing the current users and
managerial skills required to implement the
system. And finally, Raymond’s framework
does not take into account factors associated
with strategy, skills and human resources.
Hence, it is observable that these models have
focused on some aspects of organizations using
their own viewpoint, while a holistic and com-
prehensive approach is absent there. Consider-
ing lack of a holistic assessment framework in
the literature, authors intend to present a new
framework encompassing a comprehensive set
of dimensions and associated factors using the
McKinsey 7S model in this paper.
ERP Readiness Factors
In this study, a comprehensive review of the
relevant literature was conducted in 2009 and
2010. Articles from journals, conference pro-
ceedings, doctoral dissertations, and textbooks
were identified, analyzed, and classified. Since
there are numerous factors affecting ERP
projects implementation, it was necessary to
search through a wide range of studies from
different sources. So, the scope of the search
was not limited to specific journals, confer-
ence proceedings, doctoral dissertations, and
textbooks. Management, IT, and IS are some
common academic disciplines in ERP research.
Consequently, the following online journals,
conference databases, dissertation databases,
and textbooks were searched to provide a com-
prehensive bibliography of the target literature:
ABI/INFORM database, ACM Digital Library,
Emerald Fulltext, J Stor, IEEE Xplore, ProQuest
Digital Dissertations, Sage, Science Direct,
and Web of Science. The literature search was
based on the descriptors, ‘ERP critical success
factors’, ‘ERP implementation success’, ‘ERP
success factors’, ‘ERP readiness assessment’,
‘ERP readiness assessment factors’, ‘ERP re-
quirements’, and ‘ERP prerequisites’. While
the 7S model has been used as the basis of the
proposed framework, McKinsey 7S question-
Table3.DimensionsandfactorsofRaymond’sframework(Raymondetal.,2006)
Dimensions Factors
Organizational Context • Availability of resources
• Operational methods
• Competitive strategy
• Sophistication of existing IT use
• Procurement methods
Business Processes • Operational
• Managerial
• Integration
Perception of ERP • Complexity/cost
• Benefits/strategic advantage
• Desire to implement
External Forces • Business environment
• Power of customers
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naires have been used for discovering other
associated factors in each dimension. The time
frame was based on the availability of the re-
sources in these online databases.
An initial search through the literature
yielded 353 articles. The actual selection of
the article for inclusion in the compilation
was dependent upon the researcher’s decision
after reading the article abstract and title. As
mentioned earlier, readiness assessment had to
be conducted at the pre-implementation phase
of an ERP project. Therefore, those articles
including factors attended especially in the pre-
implementation phase of an ERP project would
be identified for further investigations. Based
on preliminary investigations, 113 articles were
selected for further studies. Table 4 shows the
distribution of the articles under the categories
of journals, conference proceedings, textbooks,
and dissertations.
Through this method, 23 factors were
identified in 7 main dimensions. Each main
dimension and associated factors are explained
below.
Strategy
A risk repeatedly identified in the literature is
lack of alignment between the organization
strategy and the chosen ERP software (Daven-
port, 1998, 2000). Organizations must be aware
of why an ERP system should be implemented
and what critical business goals it will address
(Umble & Umble, 2002). Hence, identifying
business goals, determining the strategic busi-
ness issues and strategic requirement identifica-
tion are essential elements of an ERP project
prior to initiating the project. This study focuses
on vision and mission, goals/objectives of the
project, and strategic IT plans.
Vision and mission. It is essential to have a
clear vision and mission for the ERP sys-
tem (Esteves & Pastor, 2000; Law & Ngai,
2007; Nah & Delgado, 2006; Nah, Lau, &
Kuang, 2001). The vision and mission are
needed to guide the ERP implementation
(Buckhout, Frey, & Nemec, 1999; Holland
& Light, 2001) and should be related to
business needs including a justification for
the investment (Ngai, Law, & Wat, 2008).
They must be well understood across the
organization (Shanks et al., 2000; Somers
& Nelson, 2001) and should be clearly
stated in the business plan (Holland &
Light, 1999; Nah et al., 2003; Zhang, Lee,
Zhang, & Banerjee, 2003).
Goals / objectives. Goal is a general aim in
line with the company’s mission (John-
son & Scholes, 1999). The initial phase
of any project should begin with a con-
ceptualization of the goals and possible
ways to fulfill them (Somers & Nelson,
2001). Davenport (2000) attributed the
high failure rates of ERP projects to poorly
defined goals. The goal statement should
include critical business needs the system
is supposed to address and the business
values it is intended to deliver (Razmi et
al., 2009; Soja, 2008). Goals should also be
measurable (Al-Mashari, Al-Mudimigh, &
Zairi, 2003) and well-understood across the
organization (Shanks et al., 2000; Somers
& Nelson, 2001). In addition to project
goals, the scope of the ERP project must
also be clearly defined (Bajwa, Garcia, &
Mooney, 2004; Rosario, 2000; Shanks et
al., 2000; Somers & Nelson, 2001).
Strategic IT plans. The alignment of IS plan-
ning and business planning is one of the
top problems reported by executives and
IS managers (Ho & Lin, 2004; Somers &
Nelson, 2003). It is believed that the align-
ment of IT with business plans supports
organizations to use IT as a competitive
weapon (Kearns & Lederer, 2001) and
boosts organizational performance (Oh &
Pinsonneault, 2007). Today, businesses
need strategic planners to continually
evaluate business goals and define the
information systems capabilities required
to support these goals (Stratman & Roth,
2002). Strategic IT planning addressing
this issue, characterizes an organization’s
competence in matching IT capabilities
with the changing business requirements
International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 29
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Table4.Distributionofarticlesbyjournals,conferenceproceedings,textbooks,anddissertations
Publication Type/ Title No. of
Articles
Conference 14
Americas Conference on Information Systems (AMCIS) 4
European conference on information systems 1
Annual BIT conference 1
International Conference on Information Systems 2
Hawaii international conference on system sciences 4
IEEE International Conference on Management of Innovation and Technology 2
Journal 92
Academy of Management Review 1
ACM SIGMIS Database 1
Advanced engineering informatics 1
Advances in Engineering Software 1
Automation in construction 1
Business Process Management Journal 11
Business World 1
Communications of the ACM 3
Communications of the AIS 1
Computers in Industry 2
Construction Management and Economics 1
Datamation 1
Decision Sciences 1
Decision Support Systems 2
European Journal of Information Systems 1
European Journal of Operational Research 4
Harvard business review 1
IEEE Engineering Management Review 1
IEEE software 1
Industrial Management 1
Industrial Management & Data Systems 4
Information & Management 9
Information Management & Computer Security 1
Information Systems 1
Information Systems Frontiers 1
Information systems management 4
International Journal of Accounting Information Systems 1
International Journal of Enterprise Information Systems 3
continuedonfollowingpage
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of the enterprise. It helps ensure that IT
development goals in general and ERP
goals in particular are aligned with the
needs of the organization.
Structure
The structure of an organization is consid-
ered very important for firms adopting ERP
(Davenport, 1998, 2000; Hong & Kim, 2002).
According to Daft (1998, p. 15), “Structural
dimensions provide labels for describing the
internal characteristics of an organization.
One can mention commonly cited structural
dimensions as centralization, specialization,
standardization, formalization, hierarchical
levels, and span of control”. Different research-
ers used specific dimensions based on their
research purposes; for example, centralization
and formalization have been used in assessing
technology-structure relationships (Morton &
Hu, 2004). In this study, authors focused on the
centralization, specialization, and formalization
aspects, which are believed to be adequate for
assessing technology- structure relationships
(Donaldson, 2001). In addition, organization
size and CIO position in organization have
been studied here.
Centralization. When decisions are kept at
the top, an organization is centralized,
whereas in decentralized organizations,
decisions are delegated to lower organi-
zational levels among its members (Daft,
1998; Mintzberg, 1980). In the case of ERP
projects, centralization refers to the extent
to which project decisions are controlled
by the top management or project manage-
International Journal of Human-Computer Interaction 1
International Journal of Information Management 2
International Journal of Operations & Production Management 2
International Journal of Production Economics 3
International Journal of Production Research 1
International Journal of Project Management 1
Journal of Computer Information Systems 2
Journal of Engineering and Technology Management 1
Journal of Enterprise Information Management 4
Journal of Global Information Technology Management 1
Journal of Management Information Systems 2
Journal of Manufacturing Technology Management 1
Journal of Strategic Information Systems 1
Knowledge and Process Management 1
Management science 2
MIS Quarterly Executive 4
Omega 1
Technovation 1
Textbook 6
Dissertation 1
Total 113
Table4.continued
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ments. Tight control over project decisions
can ensure that system implementation is
consistent with the organization’s goals and
conflicts can be efficiently resolved. On
the other hand, centralization restrains the
innovativeness of the project team members
and may restrain their participation in the
project (Chien, Hu, Reimers, & Lin, 2007).
However, it seems that organizations with
high levels of centralization may favor ERP,
in contrast to decentralized ones (Morton &
Hu, 2004; Strong, Volkoff, & Elmes, 2001).
Specialization. Specialization is the extent to
which tasks are subdivided into separate
jobs in an organization. If specialization
is extensive, it is likely for each worker
to perform a narrow range of works. ERP
systems might be more suitable for firms
having distinct and specialized functions
or tasks (Strong et al., 2001). It’s believed
that ERP systems may be more useful in
organizations where operations and tasks
are explicitly defined. The reason is that
ERP enforces a disciplined behavior for
adopting organizations in such a way to
make procedures clear (Morton & Hu,
2004; Strong et al., 2001). Therefore,
organizations with high level of special-
ization may favor ERP, in contrast to less
specialized ones.
Formalization. Formalization is defined as
the standardization of work processes
and documentation (Donaldson, 2001). In
other words, formalization is the degree
to which rules and procedures are clearly
documented and are made known to all
employees. Just like specialization, it is
believed that where organizational opera-
tions and tasks are explicitly formalized,
ERP systems may be more useful (Morton
& Hu, 2004; Strong et al., 2001).
Size. Evidence suggests that the success of IT
projects in general and ERP projects in
particular may be impacted by organiza-
tion size (Bernroider & Koch, 2001; Bu-
onanno et al., 2005; Laukkanen, Sarpola,
& Hallikainen, 2005; Lee & Xia, 2006).
It seems that, larger firms have bigger
pools of sophisticated professionals and
are able to house larger IT departments
than do smaller firms (Hunton, Lippincott,
& Reck, 2003; Laukkanen et al., 2005).
Furthermore, other researchers imply that
success of IT projects increases in larger
organizations because of more availability
of resources (Ein-Dor & Segev, 1978;
Hunton et al., 2003). Organization size has
been described differently in the literature.
However, it seems that the concept can be
assessed using employee workforce, and/
or annual turnover/sales (Buonanno et
al., 2005; Laukkanen et al., 2005). Here,
authors chose to use both annual revenues
and number of employees for assessing the
organization size.
CIO position. The role of the chief informa-
tion officer (CIO) has grown in importance
just as the role of IT within organizations
in recent years (Enns, Huff, & Golden,
2003; Preston, Leidner, & Chen, 2008).
Today, CIOs are executive-level leaders
that generally report directly to the CEO
(Chun & Mooney, 2009). Today, the role of
CIO has evolved into the one responsible
for providing IT infrastructure and capabili-
ties to ensure effective business operations
(DellaVechia, Scantlebury, & Stevenson,
2007; Leidner & Mackay, 2007). They help
planning and implementing IT strategies in
organizations. In successful ERP projects,
the CIO must be able to build strong rela-
tionships with her/his business executive
peers, must behave as a strategic partner
with the business, and be able to align IT
investments with strategic business priori-
ties (Willcocks & Sykes, 2000).
Systems
Systems refer to formal and informal proce-
dures and systems that support the strategy
and structure (Peters & Waterman, 1982). For
assessing this dimension, authors used three
following factors:
32 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011
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IT Infrastructure. Adequate IT infrastructure,
hardware and networking are crucial for
the success of an ERP project (Al-Mashari,
2003; Al-Mashari et al., 2003; Chuang &
Shaw, 2008; Finney & Corbett, 2007; Jarrar,
Al-Mudimigh, & Zairi, 2000; Ngai et al.,
2008; Peslak, 2006; Soja, 2006; Umble,
Haft, & Umble, 2003; Verville, Bernadas, &
Halingten, 2005). Before ERP implementa-
tion, current IT situation have to be care-
fully evaluated to determine the problems
that an organization may encounter during
implementation (Holland & Light, 1999).
The more the complexity of organizational
legacy systems (e.g., multiple platforms
in enterprise applications), the higher the
amount of technical and organizational ef-
forts required in ERP implementation, and
vice versa. So, it’s crucial for organizations
to overcome the problems arising from IT
legacy systems. Moreover, completeness,
compatibility, usability and integrality of
the current systems should be achieved
(Yang, Wu, & Tsai, 2007) and current
infrastructure might be upgraded (Kumar
et al., 2003; Palaniswamy & Frank, 2002).
Business processes. Business processes is
considered as one of the important factors
in ERP literature (Al-Mashari et al., 2003;
Bajwa et al., 2004; Kræmmergaard &
Rose, 2002; Palaniswamy & Frank, 2002;
Somers & Nelson, 2004; Umble et al., 2003;
Yusuf et al., 2004). Since, modifications
of the ERP software should be avoided
to reduce errors and to take advantage of
newer versions and releases of the system,
aligning the business process to the soft-
ware implementation is a must (Holland &
Light, 1999; Sumner, 1999). It is inevitable
that business processes are identified,
documented, improved and molded to fit
the new system (Bingi, Sharma, & Godla,
1999; Yang et al., 2007). Usually, exten-
sive reengineering efforts is necessary
before choosing a system (Kremers & Van
Dissel, 2000; Somers & Nelson, 2003).
Hence, the processes needing improve-
ment should be identified and necessary
adjustments should be made prior to ERP
implementation (Yang et al., 2007). Also,
a clear understanding of business process
should be achieved in ERP projects (Ho
& Lin, 2004; Motwani, Subramanian, &
Gopalakrishna, 2005; Murray & Coffin,
2001; Ward, Hemingway, & Daniel, 2005).
Data. One of the important requirements of
the success of an ERP system is the avail-
ability and timeliness of accurate data.
Since ERP system modules are intricately
integrated, improper data input into one
module will adversely affect the function-
ing of other modules. Thus, data quality
and accuracy is a major determinant of
ERP success (Bajwa et al., 2004; Somers
& Nelson, 2001, 2004; Umble et al., 2003;
Xu, Nord, Brown, & Nord, 2002; Yusuf et
al., 2004; Zhang et al., 2005). One of the
main data-related problems in organiza-
tions is that data are not kept in a single
database; rather, they spread across doz-
ens of separate databases, which hinders
the project success (Davenport, 1998).
Data-related challenges include finding
the proper data to load into the system and
converting disparate data structures into a
single, consistent format before system use
(Somers & Nelson, 2004). Some authors
also pointed to data quality controls in the
project (Xu et al., 2002). Also, educating
users on the importance of data accuracy
and correct data entry procedures should
be a top priority in an ERP project (Umble
et al., 2003).
Style / Culture
Style mainly refers to organizational culture and
management style (Peters & Waterman, 1982).
Three factors are extracted here as below:
Organizational culture. Cultural attributes are
cited among important factors affecting
ERP projects and many researchers have
suggested that the corporate culture can
cause mismatch problems during the ERP
implementation process (Al-Mudimigh,
International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 33
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2007; Bozarth, 2006; Häkkinen & Hilmola,
2008; Ke & Wei, 2008; Krumbholz &
Maiden, 2001; Peslak, 2006; Soh, Kien,
& Tay-Yap, 2000; Soja, 2006). Some
researchers suggested that successful
technological innovations require that
both the technology be aligned with the
organization culture and the culture be
reshaped to fit the demands of the new
technology (Cabrera, Cabrera, & Barajas,
2001; Yusuf et al., 2004). Dimensions of
organizational culture can be characterized
as learning and development, participative
decision making, power sharing, support
and collaboration, and tolerance of conflicts
and risk (Ke & Wei, 2008).
Top management support. Top management
support is the most frequently cited CSF
for ERP implementation (Al-Mashari et al.,
2003; Chuang & Shaw, 2008; El Sawah,
Tharwat, & Rasmy, 2008; Finney & Cor-
bett, 2007; Häkkinen & Hilmola, 2008;
Hanafizadeh et al., 2010; Law & Ngai,
2007; Remus, 2007; Snider, Da Silveira,
& Balakrishnan, 2009; Soja, 2006; Umble
et al., 2003; Yusuf et al., 2004; Zhang et
al., 2005). The ERP project must receive
approval and support from top manage-
ment particularly early in project life (Al-
Mashari et al., 2003; Bingi et al., 1999;
Sarker & Lee, 2003; Shanks et al., 2000;
Somers & Nelson, 2001). She/he must be
willing to become involved and to allocate
required resources to the project (Holland
& Light, 1999; Nah et al., 2003). Since
ERP projects affect many stakeholders in
an organization, top management needs to
mediate between various interest groups
to resolve conflicts when necessary (Dav-
enport, 1998). Management must also be
involved in every step of the ERP project,
monitor the progress of the project and lead
the project teams (Bancroft, 1996; Nah et
al., 2001, 2003).
Communication. Clear and effective communi-
cation is cited among the important factors
required for ERP systems implementation
(Achanga, Shehab, Roy, & Nelder, 2006;
Al-Mashari et al., 2003; Chuang & Shaw,
2008; Law & Ngai, 2007; Sarker & Lee,
2003). Communication includes the formal
promotion of ERP project team and report-
ing the project progress to the staff (Holland
& Light, 1999). In order to avoid failures in
communication, an open and honest infor-
mation policy communicated to the users
(Bancroft, 1996; Kumar et al., 2003; Nah
et al., 2001; Sarker & Lee, 2003) and a free
flow of information (Sheremata, 2000) are
needed. Therefore, it is necessary to have a
communication plan in place for all stages
of the project which should include project
goals (Al-Mashari et al., 2003; Holland &
Light, 1999; Rosario, 2000; Shanks et al.,
2000; Somers & Nelson, 2001), project
tasks, change management strategies, and
the project scope (Al-Mashari et al., 2003;
Bancroft, 1996; Sumner, 1999).
Staff
Staff refers to people/ human resource related
issues. Three factors have been identified here
as factors affecting staff:
Human resource management. Qualified staff
is one of the most valuable resources of ev-
ery organization. The ability of an organiza-
tion to implement an ERP system is largely
dependent on its ability to recruit, select,
place, appraise and develop appropriate
employees. So, it’s crucial for organizations
to exploit proper mechanisms to recruit and
preserve qualified employees, and nurture
and maintain a high level of employees’
morale and motivation among them (Kim,
Lee, & Gosain, 2005; Metaxiotis, Zafei-
ropoulos, Nikolinakou, & Psarras, 2005;
Skok & Legge, 2002; Umble et al., 2003;
Verville et al., 2005; Willcocks & Sykes,
2000). It seems that the current situation
of staff is a very effective factor in new
technology developments in organizations.
It is suggested that older and less educated
workers will be more resistant than younger
and more educated ones (Herold, Farmer,
& Mobley, 1995).
34 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011
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Training and education. Users’ training is
another most widely cited critical success
factor (Achanga et al., 2006; Al-Mashari
et al., 2003; Aladwani, 2001; Amoako-
Gyampah & Salam, 2004; Bingi et al.,
1999; Bozarth, 2006; Häkkinen & Hilmola,
2008; Ngai et al., 2008; Soja, 2006; Somers
& Nelson, 2003; Umble et al., 2003; Xu
& Ma, 2008; Yusuf et al., 2004). Some
researchers have specifically mentioned
the need for project team training (Kumar
et al., 2003) while others have focused on
user training (Bingi et al., 1999; Kumar et
al., 2003; Mandal & Gunasekaran, 2003;
Robey, Ross, & Boudreau, 2002; Trimmer,
Pumphrey, & Wiggins, 2002). Training al-
lows employees to understand the overall
concepts of the ERP system. It should
encompass the development of business
practices and processes (Legare, 2002;
Ngai et al., 2008; Robey et al., 2002), as
well as IT (Tarafdar & Roy, 2003; Voordijk,
Van Leuven, & Laan, 2003) and ERP
skills (Stratman & Roth, 2002). Training
should be a priority from the beginning of
the project and required money and time
resources should be allocated to it (Nah
et al., 2001). Also, a proper plan for ERP
training facilities (Finney & Corbett, 2007;
Rao, 2000a, 2000b) and a well-documented
education and training strategy (Mabert,
Soni, & Venkataramanan, 2003) are other
vital considerations.
Project team. Project team competences is
another most widely cited critical success
factor (Bozarth, 2006; Finney & Corbett,
2007; Kumar et al., 2003; Mandal & Gu-
nasekaran, 2003; Metaxiotis et al., 2005;
Nah et al., 2001; Peslak, 2006; Rao, 2000b;
Shanks et al., 2000; Soja, 2006; Somers &
Nelson, 2001, 2004; Willcocks & Sykes,
2000). ERP project needs the best organiza-
tion employees assigned to the project team
(Bingi et al., 1999; Rosario, 2000; Shanks
et al., 2000). Involving people with both
business and technical knowledge into the
project team is critical to achieve success
(Al-Mashari et al., 2003; Allen, Kern, &
Havenhand, 2002; Bajwa et al., 2004;
Bingi et al., 1999; King & Burgess, 2006;
Shanks et al., 2000; Somers & Nelson,
2001, 2004; Sumner, 1999). The project
team should be balanced, cooperative, cross
functional, and have the full time basis
key people (Nah et al., 2001; Rao, 2000a;
Shanks et al., 2000). Their performance
should be fairly compensated (Umble et
al., 2003). In addition, the decision maker
in the project team should be empowered
to make quick and effective decisions
(Shanks et al., 2000). Also, project team’s
prior experience in large IT projects can be
characterized as another facilitator in the
project (Allen et al., 2002; Marsh, 2000).
The availability of these elements in orga-
nizations or organizational capabilities in
acquiring them can help achieving success
in ERP projects.
Skills
Skills are the distinctive competences and what
the company does best (Peters & Waterman,
1982). ERP systems are complex technologies
that require specialized skills. Several studies
have showed that it is essential to have skilled
people to assure the success of a project (Daven-
port, 2000; Skok & Legge, 2002; Sumner, 1999;
Wateridge, 1997). Tadinen (2005) identified 7
key people in ERP project implementation team
as management, IT personnel, top management,
consultants, vendors, IT consultants, and end
users. This classification has been selected here
for investigating the situation of skill dimension.
Since the focus of the study is internal factors of
organizations, external key people for organiza-
tion are excluded here. Also, management and
top management group are merged into one as
management. Hence, three key people groups
as management, IT personnel, and end users
are investigated:
Management’s skills. Management’s skills
has been identified as one of the important
factors in ERP projects (Appleton, 1997;
Bancroft, 1996; Kræmmergaard & Rose,
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2002). Several skills are cited by research-
ers as required managerial skills such as po-
litical and personal skills (Walsham, 1995),
communication, and team-building skills
(Appleton, 1997). They should preferably
have experience with ERP implementation,
business and managerial skills (Bancroft,
1996). Kræmmergaard and Rose (2002)
summarized ERP competences for manag-
ers as organizational, strategic, business
process, project management, technology,
ERP systems, human resource, leadership,
and communication competences.
IT staff’s skills. The IT staff’s skills are cited
among the important factors required for
the success of IT systems in general and
ERP systems in particular (Essex, Magal,
& Masteller, 1998; Esteves & Pastor, 2001;
Lee & Lee, 2004). Several ERP stud-
ies (Davenport, 2000; Holland & Light,
1999; Lee & Lee, 2004; Markus & Tanis,
2000; Sumner, 1999; Willcocks & Sykes,
2000) have suggested that the skills of IT
professionals must be adequate to ensure
success with ERP project. It seems that
IT systems are more likely to succeed in
organizations where general IT skills and
relevant in-house IT expertise is high (Lee
& Lee, 2004). So, the availability of skilled
IT professionals and their participation
in the project is valuable to organization.
Users’ skills. The quality of end users and
their general IT skills are considered as
one of the critical factors necessary for IS
success (Essex et al., 1998; Lee & Lee,
2004; Peslak & Boyle, 2010; Razmi et al.,
2009). It is more likely for skilled users to
understand the need for process changes
than less skilled ones and in organiza-
tions where users have required skills and
expertise, it is reasonable to suggest that
ERP implementation success will be higher
compared to where such expertise is lack-
ing (Duplaga & Astani, 2003; Essex et al.,
1998; Lee & Lee, 2004).
Shared Values/Superordinate Goals
The terms shared values/ superordinate goals are
described as guiding concepts and fundamental
ideas around which a business is built (Peters
& Waterman, 1982). In ERP projects, the term
refers to the degree to which a project team
accepts and believes the project goals (Pinto et
al., 1993). A superordinate goal enhances the
likelihood of finding good quality solutions
in a timely manner that should be organized
in a manner that enables the project team to
describe in detail what the company strives
to achieve (Chien et al., 2007). Three factors
have been identified here as affecting factors
on shared values:
Project champion. The need to have a project
champion is considered as another rela-
tively important factor (Bancroft, 1996;
Legare, 2002; Nah et al., 2001; Sumner,
1999). Champions are critical to drive
consensus and to oversee the entire life
cycle of ERP project (Rosario, 2000). The
project champion must be a high level of-
ficial in the organization (Sumner, 1999).
S/he must continually manage resistance
and change during the implementation
(Murray & Coffin, 2001). They should
possess strong leadership skills (Mandal
& Gunasekaran, 2003), and business,
technical, personal, as well as managerial
competencies (Kræmmergaard & Rose,
2002; Somers & Nelson, 2001). Hence,
it can be expected that the existence of
a project champion in ERP projects can
enhance implementation processes and the
possibility of project success.
Company-wide commitment. Since ERP
systems are enterprise-wide and cross
functional systems, it is imperative to get
support from all functional segments of an
organization (Law & Ngai, 2007; Somers
& Nelson, 2001, 2004; Yusuf et al., 2004;
Zhang et al., 2005) and the project success
36 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011
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requires commitment and cooperation of
personnel from all segments of the busi-
ness (Zhang et al., 2003). The personnel
must be convinced and justified that the
organization is committed to implement
the ERP system (Umble et al., 2003). They
must recognize the need for change and be
properly prepared for changes to prevent
resistance at the implementation stage.
When personnel involvement is low, they
may not psychologically ready to change
and accept the new ERP system (Wang &
Chen, 2006).
Shared beliefs. Shared beliefs refer to a belief
about the overall impact of the system on
the organization with regard to its benefits.
It is a shared belief with employees and
managers regarding the benefits of the
ERP system (Amoako-Gyampah & Salam,
2004). It is believed that if employees have
a shared understanding of why a technology
is being implemented, it is likely to foster
trust and cooperation among them that can
lead to implementation success (Amoako-
Gyampah & Salam, 2004). Thus, it is im-
portant for managers to be aware early in
the project whether different members of
the organization have different perceptions
on the shared beliefs about the concept
of ERP. Knowing this, they can develop
mechanisms such as communication and
training plans to minimize those gaps.
Developing the Conceptual
ERA Framework
There are many readiness models in the litera-
ture described as multidimensional constructs
(Beebe, Harrison, Sharma, & Hedger, 2001;
Chilenski, Greenberg, & Feinberg, 2007; Ed-
wards, Jumper-Thurman, Plested, Oetting, &
Swanson, 2000; Fathian, Akhavan, & Hoorali,
2008; Hanafizadeh, Hanafizadeh, & Khoda-
bakhshi, 2009; Lai & Ong, 2010; Lehman,
Greener, & Simpson, 2002; Razmi et al., 2009).
The advantage of using multidimensional con-
structs is that the contribution of each dimension
in a higher level construct can be assessed as
compared to setting all items in a single com-
posite score. If all items are posited in a single
first-order construct, then it would be difficult
to ascertain the contribution of each domain on
the overall construct (Koufteros, Babbar, & Kai-
ghobadi, 2009). With respect to this advantage,
there are many multidimensional constructs
proposed by authors in different subjects, but
there are few multidimensional constructs in
which the overall relations of the construct
Figure1.ProposedframeworkforERPreadinessassessment
International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 37
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with its specific dimensions are well explained
(Law, Wong, & Mobley, 1998). There are three
ways in which multidimensional constructs
can be conceptualized. First, the latent model
in which multidimensional constructs exist
at deeper levels than their individual dimen-
sions. Second, the aggregate model in which
multidimensional constructs are formed based
on algebraic functions of their dimensions.
And the third one is the profile model which
designates multidimensional constructs formed
as different profiles of their dimensions (Law et
al., 1998). Using this taxonomy, the latent model
seems relatively appropriate for defining ERP
readiness construct. Latent variables cannot
be directly observed and have to be assessed
by observable measures. The direction of the
relationship can be either from the construct
to the measures known also as reflective, or
from the measures to the construct known as
formative measurement (Edwards & Bagozzi,
2000). Based on the review conducted on mul-
tidimensional constructs above, the readiness
model are proposed as a latent or reflective
multidimensional model which has 7 main
dimensions or constructs with their associated
factors in each. The proposed model for ERP
readiness assessment is indicated in Figure 1.
RESEARCH METHODOLOGY
The research steps including ERP Literature
review, ERA factors extraction, instrument de-
velopment, data collection, data analysis using
CFA, developing the model, Extracting factor
assessment questions, and finally applying the
model on 2 cases is shown in Figure 2.
Instrument Development
The questionnaire used for data collection
contained scales to measure the various factors
of the research model. The survey instrument
asked the respondents to rate the impact of 23
identified factors on ERP readiness using a 7
point scale with items ranged from 1 (strongly
low) to 7 (strongly high). Face or content valid-
ity of the questionnaire is conducted through
the literature review and experts judgment
(Straub, 1989). Content validity refers to the
extent to which the items on a test adequately
reflect the domain of the content for which
they were written (Nunnally, 1978). To ensure
this, at first six ERP project managers of high
academic levels and more than 5 year experi-
ence reviewed the questionnaire. They had some
comments on the length and the clarity of each
Figure2.Theresearchsteps
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question. Their suggestions were incorporated
into the final version of the questionnaire. The
content validity of the instrument was thereby
addressed. Also, for evaluating the reliability of
the questionnaire, test-retest method was used.
Test-retest determines whether an instrument
will produce the same scores from the subjects
every time (Cronbach, 1951; Nunnally, 1978;
Nunnally & Bernstein, 1994; Peter, 1979). For
conducting test- retest method, authors asked
15 project managers in a 14-day interval to
participate in the study. The resulted Cronbach
alpha estimated to be 0.87 (greater than 0.7)
that implies good reliability of the instrument
(Nunnally, 1978).
Data Collection
Since readiness assessment factors are diverse
in organization, human, and technical contexts,
it needs experts familiar with all 7 main dimen-
sions to do data gathering. It seems that project
managers involved in business and technical
issues in ERP projects are so familiar with
success and failure causes of these projects
and have the highest merit to participate in the
research. Hence, the target of this study was
ERP project managers in organizations that had
adopted a reputable ERP system located in Iran.
In order to gather data from the eligible experts,
the following procedure was performed: first,
the eligible firms and related project managers
were identified and their contact information
were gathered; second, authors asked their
project managers to participate in the study;
third, the questionnaire were sent to them, and
finally, they filled the questionnaire. Totally, 237
questionnaires were sent, 159 questionnaires
were gathered and 153 usable questionnaires
were used for the analysis. The response rate
was 0.67.
Data Analysis Method
The Structural Equation Modeling (SEM)
approach was used to validate the research
model. SEM is a powerful multivariate data
analysis tool that estimates a complete model
incorporating both measurement and structural
considerations (Kelloway, 1998). Confirma-
tory Factor Analysis (CFA) is a widely used
application of SEM to test the construct. It
is one of the most prevalent SEM techniques
in the evaluation especially in the social and
behavioral sciences (Mueller, 1996). Here,
CFA using LISREL 8.54 (Jöreskog & Sörbom,
1989) was employed to perform the analysis.
Prior to factor analysis, a test was conducted
to verify the adequacy of the data for CFA.
The Kaiser-Meyer-Olkin (KMO) measure of
sampling adequacy is a popular measure for
assessing the extent to which the indicators of
a construct belong together (Kaiser, 1974). The
KMO is 0.73 which is above the “Mediocre”
threshold of 0.5 (Kaiser, 1974). Large values
for the KMO indicate that a factor analysis of
the variables is a good idea.
RESULTS
The results of data analysis consist of three
main sections as first order CFA, second order
CFA, and proposing the ERA framework.
Furthermore, theoretical comparison of the
proposed framework with available models is
conducted in this part.
First Order CFA
First order CFA has been performed for assess-
ing measurement model, construct validity,
convergent validity, and discriminant validity.
The concern of construct validity is that instru-
ment items selected for a given construct are,
considered together, a reasonable operational-
ization of the construct (Cronbach & Meehl,
1968). It can be examined by observing the
factor loading of each item. A factor loading
of less than 0.40 signifies lack of reliability, in
which case the item should be dropped (Hinkin,
1995). Just 2 out of 23 items dropped from
the initial items namely “centralization” and
“specialization” both belonging to structure
construct. It might be because of that there is a
high level of covariance among formalization,
centralization and specialization factors. Gener-
ally, high levels of formalization may lead to
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high levels of centralization in the organization
and more distinct and specialized functions or
tasks, implying high levels of specialization.
Convergent validity adds to our confidence
in measuring a variable. Convergent validity
means the items measuring the variable are
indeed theoretically related to each other and
the relation is confirmed if the items within the
construct are significantly correlated with one
another, particularly when compared to items
in other constructs. The presence of convergent
validity can be determined using multiple indi-
cators. This is often done by examining the com-
posite reliabilities of the constructs. Measures
exceeding 0.70 are generally recommended
(Bagozzi & Yi, 1988; Fornell & Larcker, 1981;
Hair, Anderson, Tatham, & Black, 1995; Nun-
nally, 1978). Construct reliability can be further
assessed using cronbach alpha exceeding 0.70
(Bagozzi & Yi, 1988; Hair et al., 1995; Nunnally,
1978) and Average Variance Extracted (AVE)
exceeding 0.50 (Fornell & Larcker, 1981). In
this study, cronbach alpha values ranged from
0.77 to 0.89, and all AVE values were above
0.53, providing strong evidence of measure
reliability. Discriminant validity refers to the
degree to which measures of different constructs
are distinct from each other (Hair et al., 1995).
For adequate discriminant validity the square
root of AVE must exceed the correlations of the
constructs (Chin, 1998; Fornell & Larcker, 1981;
Gefen & Straub, 2005) which AVE reflects the
variance captured by the factors here. In Table
5, all results are summarized and appear to be
acceptable as well as significant.
Table 6, summarizes the results of dis-
criminant validity of constructs. As it can be
seen from the table, all of these values exceed
the correlation values of the constructs. Hence,
it can be inferred that identified factors (items)
are good measures for McKinsey dimensions
(constructs).
Second Order CFA
The results of first order CFA imply that identi-
fied factors are good measures for McKinsey
dimensions. The goal of second order CFA is
to assess whether McKinsey dimensions are
good measurements for ERA or not. To this end,
second order CFA has been conducted. Perhaps
the greatest advantage of CFA using LISREL is
that it offers an index of how well the proposed
model fits the given data set (Greenspoon &
Saklofske, 1998). The result of the analysis is
shown in Figure 3.
As can be seen from the figure, all loading
values are exceeding the threshold value of 0.4.
Considering the complexity of the model, eight
fit indices were used as goodness of fit index
(GFI), adjusted goodness of fit index (AGFI),
comparative fit index (CFI), normed fit index
(NFI), non-normed fit index (NNFI), p- value,
root mean square error of approximation (RM-
SEA), and χ2/df which are very common in the
literature. The results of the analysis and ac-
cepted thresholds are summarized in Table 7.
As can be seen from Table 7, all indices
are significant. Totally, the results of both first
and second order CFA imply that the first order
factors are good measures for McKinsey dimen-
sions and the dimensions are good measures
for the ERA construct.
Developing the Practical
ERA Framework
Based on the results obtained in the first and
second order CFA, the readiness model is
proposed as a latent multidimensional model
which has 7 main dimensions or constructs
with 3 associated factors in each. Also, for en-
hancing the applicability of the model, authors
have identified and proposed some questions
extracted from the literature for assessing the
current situation of every factor. These questions
are more assessable through organizations even
by less specialized people. The factors, associ-
ated assessment questions, and their references
are appeared in appendix A. Based on these
questions, a questionnaire is developed which
is appeared in appendix B. There are at least 3
questions for assessing every factor and there
are qualitative as well quantitative questions
in the questionnaire. The higher values in the
scores for all of the questions are desired.
40 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011
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Table5.FactorLoading(FL),CronbachAlpha(CA),CompositeReliabilities(CR),andAVE
Results
Mckinsey
Dimensions
Factors or Items FL CA CR AVE
Strategy (STG) Vision and mission (STGVIS) 0.85 0.81 0.83 0.62
Goals/ objectives (STGOBJ) 0.60
Strategic IT plans (STGSTG) 0.77
Structure (STR) Formalization (STGFRM) 0.70 0.77 0.77 0.53
Size (STGSIZ) 0.69
CIO position (STGCIO) 0.79
Systems (SYS) IT Infrastructure (SYSINF) 0.62 0.79 0.79 0.56
Business processes (SYSPRC) 0.87
Data (SYSDAT) 0.74
Style (STY) Top management support (STYMNG) 0.91 0.82 0.83 0.62
Communication (STYCOM) 0.76
Organizational culture (STYCUL) 0.68
Staff (STF) Human resource management (STFMNG) 0.84 0.89 0.89 0.72
Training and education (STFLRN) 0.91
Project team (STFTEM) 0.80
Skills (SKL) Management’s skills (SKLMNG) 0.73 0.86 0.87 0.68
IT staff’s Skills (SKLITP) 0.85
Users’ skills (SKLUSR) 0.89
Shared Values
(SHV)
Shared beliefs (SHVBLF) 0.60 0.81 0.83 0.62
Company-wide commitment (SHVCOM) 0.82
Project champion (SHVCHM) 0.91
Table6.Discriminantvalidityoftheconstructs(squarerootoftheAVEandcorrelations)
Shared
Values
Structure Strategy Systems Style Staff Skills
Shared values 0.80
Structure 0.42 0.73
Strategy 0.53 0.52 0.75
Systems 0.43 0.42 0.42 0.75
Style 0.41 0.36 0.39 0.40 0.79
Staff 0.43 0.30 0.45 0.37 0.39 0.85
Skills 0.44 0.31 0.45 0.35 0.43 0.44 0.82
Note: (a) The bold fonts in the leading diagonals are the square root of AVEs,
(b) off-diagonal elements are correlations among constructs.
International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 41
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Figure3.TheresultsofsecondorderCFA
Table7.Theresultsofgoodnessoffitassessmentsandacceptedthresholds
Fit Indices Observed Values Accepted
Thresholds
Reference
GFI 0.93 > 0.90 (Chau, 1997; Segars & Grover, 1993)
AGFI 0.91 > 0.80 (Chau, 1997; Segars & Grover, 1993)
CFI 0.94 > 0.90 (Hatcher, 1994)
NFI 0.92 > 0.90 (Bentler & Bonett, 1980; Chau, 1997)
NNFI 0.93 > 0.90 (Chau, 1997)
p- value 0.09 > 0.05 (Hu & Bentler, 1998)
RMSEA 0.054 < 0.06 (Hu & Bentler, 1998)
χ2/df 1.47 < 3.00 (Chau, 1997; Segars & Grover, 1993)
42 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011
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Table8.Theresultofthetheoreticalcomparisonoftheproposedframeworkwithavailablemodels
Mckinsey
Dimensions
Factors Best Framework Razmi’s Framework Raymond’s
Framework
Strategy • Vision and mission • - • ERP implementation
vision
• -
• Goals/ objectives • Strategy and goals • ERP mission and
goals
• Project scope
• -
• Strategic IT plans • - • - • -
Structure • Formalization • Structure (tasks,
authorities and
responsibilities)
• Organizational
structure
• -
• Size • Availability of
resources
• CIO position • -
Systems • IT infrastructure • Structure of the
enterprise system
• Existing systems • Sophistication of
existing IT use
• Business processes • Process • Existing processes • Operational
methods
• Procurement
methods
• Operational busi-
ness processes
• Managerial busi-
ness processes
• Integration of busi-
ness processes
• Data • - • Decision mechanism • -
Style • Top management
support
• Management • Top management
• Resource allocation
• Assign responsibili-
ties
• -
• Communication • - • Communication • -
• Organizational
culture
• - • Culture • -
Staff • Human resource
management
• - • Personnel • -
• Training and educa-
tion
• - • - • -
• Project team • - • Project team • -
Skills • Management’s skills • Knowledge and
skills
• - • -
• IT staff’s skills • - • -
• Users’ skills • - • -
continuedonfollowingpage
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The scores of factors are achieved by doing
a simple average on the scores of associated
questions. Then, based on the weights achieved
in second order CFA (Figure 3) the readiness of
each dimension and finally the ERP readiness of
the enterprise can be assessed (Diamantopoulos,
Riefler, & Roth, 2008). Since, the assessment
questionnaire is based on a 5 point scale, the
score of every question is a value between mini-
mum 0 and maximum 1 (0-0.25-0.50-0.75-1).
For example, suppose that the average
readiness score achieved through assessment
questionnaire are 0.27, 0.28, and 0.76 for
STGVIS, STGOBJ, and STGSTG factors,
respectively. Since weighing values of the
factors are 0.84, 0.65, and 0.66 (Figure 3), the
readiness score for the strategy construct is
calculated as below:
(0.84×0.27+0.65×0.28+0.66×0.76)/
(0.84×1+0.65×1+0.66×1) = 0.42
It is clear that the values of “1” in the de-
nominator, demonstrates the maximum scores
achievable in the assessment (scores ranged
from 0 to 1). The method is the same for other
factors and dimensions. It is clear that the final
score for ERP readiness construct will be a
number between 0 and 1.
Theoretical Comparison of
the Proposed Framework
with Available Models
In this section, a comparison is done among
proposed framework and available frameworks.
This comparison not only highlights the weak-
nesses of available frameworks in covering a
comprehensive set of factors affecting organiza-
tion readiness, but also indicates the strength,
comprehensiveness, and applicability for the
purpose of the proposed framework. The result
of the comparison is summarized in Table 8.
As can be seen from Table 8, there are some
issues that have not been addressed in available
frameworks. In a first look, it can be said that
21 related factors in the proposed framework
made it more comprehensive than the available
models with their less articulated factors. It is
obviously noticeable especially in the soft fac-
tors like skills and staff contexts. It is clear that
available frameworks are focused on some key
aspects of the readiness concept using their own
viewpoint, not a holistic approach. The privilege
of using 7S model in the proposed framework
over available frameworks is that it encom-
passes different aspects of every organization
needed to being studied in such an assessment.
Also, Raymond’s framework has noticed some
Shared
Values
• Shared beliefs • Social dynamics • - • Perception of the
complexity/ cost of
ERP
• Perception of
benefits/ strategic
advantage of ERP
• Desire to imple-
ment ERP
• Company-wide com-
mitment
• - • - • -
• Project champion • - • Project championship • -
- • - • - • - • Competitive
strategy
• Business environ-
ment
• power of customers
Table8.continued
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external and environmental factors that have
not been studied in the proposed framework.
The reason is that 7S model naturally concen-
trates on inter-organizational factors, not ex-
ternal ones that are out of the control of an
organization and are somehow the same for all
organizations. Therefore, external factors have
not been studied here.
Another advantage of the proposed
framework over others is that it provides an
85 item self-assessment questionnaire, thor-
oughly extracted from the literature that can
be fulfilled by organizations for assessing their
ERP readiness. Also, the proposed framework
enjoys drill down capability which can show
weakness points of the organization. This can
help organizations directly focus on their weak-
nesses and find solutions for improving them.
Through this, organizations can drill down their
weakness areas from 7S dimensions to factors
and from factors to their associated assessment
questions. All of these imply high applicability
of the framework compared to available ERP
readiness frameworks.
ILLUSTRATIVE EXAMPLES
Banking industry is heavily dependent upon
IT (Chowdhury, 2003) and is considered as the
most IT-intensive industry in the USA (Berger,
2003). These systems have penetrated in Iranian
banking industry over the last decade, too. In
this respect, 2 Iranian banks are selected as the
illustrative examples of the paper.
Bank A has been established in 1980. It
is one of the greatest Iranian state banks that
provide service to more than 15 million custom-
ers through approximately 1900 branches, 2500
Automated Teller Machine (ATM), and 19 mil-
lion customer cards. The number of employees
is 25,000. Also, bank B as one of the greatest
Iranian private banks has been established in
1988. The bank serves more than 6.2 million
customers through approximately 600 branches,
650 ATM, and 10 million customer cards. The
number of employees is almost 6,500.
Both banks have implemented some island
and disintegrated systems in their back office
(or staff vs. line). To overcome the problem,
managements of both banks care ERP imple-
mentation. Hence, the readiness assessment
of these two banks for ERP implementation is
conducted here to gain the model validity. For
investigating readiness situation of the banks,
3 IT managers with extensive experience in a
number of large IT projects in each bank are
consulted. These experts are interviewed in
general organizational subjects as well as techni-
cal issues. Then, based on the results of these
interviews and referring to some of the related
organizational documents such as number of
employees, annual revenues, and budgeting
values, the assessment questionnaire was filled.
It has been tried to achieve a sufficient level of
consensus among experts in filling qualitative
questions.
The results of these efforts are exhibited
in Table 10. The readiness score is calculated
in a way that is illustrated before. The final
readiness scores are also calculated in the same
way. The method is illustrated as an example
for the factors of the strategy dimension in
Table 9. The scores of factors (e.g., 0.08 for
vision and mission factor) are the simple aver-
age scores of related questions (0.25, 0, and 0
for the questions of vision and mission). For
calculating the scores of dimensions, it needs
connection weights (Figure 3). With regard
to weighing values of the factors (0.84, 0.65,
and 0.66) and their related scores (0.08, 0.10,
and 0.70), the readiness score for the strategy
construct is calculated as below as an example:
(0.84×0.08+0.65×0.10+0.66×0.70)/
(0.84×1+0.65×1+0.66×1) = 0.28
Hence, the readiness score of the strategy
dimension for Bank A is 0.28. The method is
the same for other constructs and factors.
The final scores of bank A and bank B is
0.57 and 0.51, respectively, implying almost
similar readiness situation. Considering the very
weak situations in some factors (e.g., goals/
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objectives), one can infer that they should go
to plan and do some pre-implementation proj-
ects. Hence, both cases need special attention
on some factors.
Finally, readiness scores for 7 dimen-
sions of the two cases are appeared as a radar
diagram in Figure 4. It is clear from the figure
that the readiness scores of bank A are greater
than relevant scores of bank B in all of the 7
dimensions, except for the strategy dimension
and both banks face real challenges in strategy
and staff dimensions.
DISCUSSION
The results presented in Table 10 show that
the overall readiness of constructs “structure”
and “shared values” look well for two cases.
Besides, there are no considerable weaknesses
in their subsequent factors. However, regarding
the results, both banks face crucial challenges
in some dimensions and should plan to conduct
some short term projects in order to improve the
ERP system adaption. For instance, both banks
face real challenges in their human resources
training and education situation. It is strongly
needed to develop a proper training strategy and
plan. Training programs should be arranged for
the personnel and it must be tried to familiarize
them with the project. It is suggested to focus
on business processes and IT fundamental train-
ings as well as ERP concepts trainings. Using
e-learning tools can facilitate learning process
in both banks. Also, it is strongly recommended
to revise the existing rules and procedures for
employees’ recruitment especially in the ERP
project team members in order to build a strong
project team.
Table9.TheresultsoftheERAforthestrategydimensioninBankA
Factors Question Scores*
Questions Factors
Vision And
Mission
1. Existence of the documented vision and mission of the ERP project 0.25 0.08
2. The degree to which vision and mission of the ERP project are
well-understood across the organization
0
3. Existence of the business plan including a justification for the
investment
0
Goals/
Objectives
4. Existence of the carefully defined goals of the ERP system 0.25 0.10
5. Existence of the measurable goals of the ERP system 0
6. The degree to which goals of the ERP project are well-understood
across the organization
0
7. Existence of the carefully defined project scope 0.25
8. Established realistic and achievable milestones for the ERP project 0
Strategic IT
Plans
9. The degrees to which information technology systems of the firm
support its strategic goals
0.5 0.70
10. Existence of the continuous and up to date strategic IT plans 0.75
11. Existence of the written guidelines to structure strategic IT plans
in the organization
0.50
12. The degree to which top management is involved in strategic IT
plans
0.75
13. Existence of inputs from all functional areas of the strategic IT
plans
1
*Values range from 0 to1.
46 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011
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In the case of strategy dimension, project
vision, mission, and goals must be clearly
defined in both banks. The project scope, af-
fected business processes and functional units
involved in the project should be determined
prior to project start-up. It should be well-
communicated and understood throughout the
banks using open communication tools and
methods. Bank A conducted its IT master plan
2 years ago. There were no review of its IT and
business plans and strategic goals after that. So,
the bank should evaluate and refine its business
goals and define the IT capabilities required to
support these goals. Bank B looks good in its
IT strategic plans. It is mainly due to the fact
that this bank recently conducted enterprise
architecture project and has documented and
updated its business and IT plans.
Another relative weakness area in both
cases is related to the situation of systems dimen-
sion. One of the main data issues is related to
data accuracy and completeness. It means that
organizational data stored in databases is not
proper, regarding information fields supposed
to be filled. For example, the specifications of
IT assets or other organizational assets in both
banks is not properly filled in the forms and
sometimes is not accurate. The same situation
happens for human resources and financial data.
It is said that garbage in garbage out in ERPs.
So, as a first step, all information fields in the
current information systems should be checked
and completely re-filled if required. Another
data problem relates to data integration. One of
the main data-related problems in both banks
is that organizational data are spread across
several separate databases that make integrating
databases a real challenge. With respect to this
kind of problems, it is strongly recommended
that both banks involve in the cleaning up of
suspect data, matching, reformatting, and updat-
ing information from one system to prevent the
problems arises from data inconsistencies. Also,
data in their systems should be validated and
converted into a single and consistent format
before going to implement the system. Educat-
ing users on the importance of data accuracy
and correct data entry procedures should also
be another top priority.
Another weakness area identified through
readiness assessment is related to user’s skills.
IT skills are reported in a medium situation and
both banks need some plans to improve them.
It can be made possible through employing
new highly educated and qualified employees
as well as conducting training programs for
current personnel. Regarding the time, budget
and human resources constraints of the two
cases, the suggested projects can be planned
and implemented in a short term period. Weaker
areas should be concentrated upon. The im-
provements achieved in readiness levels can
be evaluated by re-performing the assessment
after a few months.
CONCLUSION
This paper, first, elaborated on the importance of
readiness assessment prior to initiating an ERP
project. It was shown that this is a complex task,
Figure4.Radardiagramforreadinessscoresin7dimensionsforthetwocases
International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 47
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not only because of the newness of the system
to the organization, but also due to many dif-
ferent aspects that need to be considered at the
same time. One of the main problems in ERP
projects is focusing on technical and financial
aspects of a project and neglecting to take into
account the non-technical issues like people
(Botta-Genoulaz & Millet, 2006), while many
information systems studies indicate that fail-
ure is largely due to organizational and social,
rather than technical factors. Therefore, in order
to appropriately deal with this problem, McK-
insey 7S model has been employed due to its
comprehensiveness in covering organizational
diverse dimensions. These 7 dimensions include
“structure”, “strategy”, “systems”, “skills”,
“style/ culture”, “staff”, and “shared values”.
23 factors contributing to these dimensions
have been identified after an in-depth study
on ERP literature. Then, first and second order
CFA were conducted on the data gathered using
questionnaire from 153 ERP project managers
in organizations that have adapted a reputable
ERP system located in Iran.
Based on the results of CFA, ERP readiness
assessment framework has been proposed based
Table10.Readinessassessmentscoresfor2cases
Dimensions Dimension Scores Factors Factor Scores
Bank A Bank B Bank A Bank B
Strategy 0.28 0.34 Vision and mission 0.08 0.08
Goals/ objectives 0.10 0.10
Strategic IT plans 0.70 0.90
Structure 0.81 0.72 Formalization 0.75 0.67
Size 0.92 0.67
CIO position 0.75 0.83
Systems 0.59 0.55 IT infrastructure 0.75 0.67
Business processes 0.50 0.67
Data 0.50 0.33
Style 0.62 0.54 Top management support 0.81 0.69
Communication 0.50 0.42
Organizational culture 0.55 0.50
Staff 0.38 0.29 Human resource management 0.42 0.33
Training and education 0.11 0.07
Project team 0.55 0.40
Skills 0.63 0.52 Management’s skills 0.75 0.58
IT staff’s skills 0.71 0.63
Users’ skills 0.46 0.38
Shared Values 0.70 0.64 Shared beliefs 0.75 0.58
Company-wide commitment 0.58 0.58
Project champion 0.75 0.75
48 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011
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on the 7S McKinsey model with 21 associated
factors. In order to enhance the applicability of
the model, 85 questions were extracted from the
literature for assessing the associated factors
in readiness model. Using this framework, the
current state of readiness of an organization to
implement an ERP project and possible areas
of improvements can be identified prior to sys-
tem implementation. The proposed framework
was then applied to two Iranian banks. With
regard to the readiness assessment results, it
was suggested that the banks are better to do
some preliminary projects to increase the prob-
ability of project success prior to initiating the
ERP project. It is noted that the cost of using
such frameworks is justifiable for an enterprise
compared to the huge costs of implementing
an ERP system and even probable costs of the
project failure.
In addition, some comparisons were done
among available frameworks and the pro-
posed framework. It has been shown that the
framework has some advantages over avail-
able frameworks such as comprehensiveness,
multi-dimensionality, and higher applicabil-
ity. Another contribution of the work is that
it incorporates McKinsey 7S model with the
concept of ERP readiness assessment. Finally,
it is noted that the value of ERP readiness as-
sessment in organizations is not achieving a
value as ERP readiness score, but identifying
probable gaps and proposing some improve-
ment plans in weakness areas. However, the
score can be useful in identifying the extent of
gaps between organizations’ As-Is and To-Be
situation in assessment dimensions, factors,
and questions. Also, this score can be used in
making managerial decisions on initiating the
ERP project regarding current situation.
LIMITATIONS AND
FUTURE RESEARCH
One of the main limitations of the work is that
the model is developed and validated for orga-
nizations located in Iran and generalizing it to
organizations abroad is left for future works.
Another limitation is the limited number of
available ERP experts specially project manag-
ers as a result of low degree of ERP penetration
in organizations to date in Iran. This limitation
made data gathering a tremendous effort for
authors.
Future works can be done in assessing
readiness of different organization in diverse
industries that can be helpful in fine-tuning of
the framework. Also, future works may follow to
investigate the target or To-Be situation of each
dimension or factor for encountering the least
potential problems. They may concentrate on
benchmarking the readiness assessment results
with pioneering companies to gauge where they
are (in terms of ERP readiness) with respect to
their competitors. In other words, the desirable
level of dimensions, factors and even assessment
questions might be investigated in future works.
ACKNOWLEDGMENTS
The authors would like to thank the anonymous
reviewers and the editor for their insightful
comments and suggestions
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PayamHanafizadehisanAssistantProfessorofIndustrialManagementatAllamehTabataba'i
UniversityinTehran,IranandamemberoftheDesignOptimizationunderUncertaintyGroup
attheUniversityofWaterloo,Canada.HewasavisitingresearchfellowattheUniversityof
Canberra,Australiain2010andavisitingscholarattheUniversityofWaterloo,Canadain2004.
HereceivedhisMScandPhDinIndustrialEngineeringfromTehranPolytechnicUniversityand
pursueshisresearchinInformationSystemsandDecision-makingunderUncertainty.Hehas
publishedinsuchjournalsastheInformation Society,Systemic Practice and Action Research,
Management Decision,Journal of Global Information Management,Telecommunications Policy,
Mathematical and Computer Modeling,Expert Systems with Applications,International Journal
of Information Management,Energy Policy tonameonlyafew.
AhadZareRavasanisaPhDstudentinInformationTechnologyManagementintheSchoolof
ManagementandAccountingatAllamehTabataba’iUniversityinTehran, Iran.Hisresearch
interestsincludeERPs,artificialneuralnetworks,andbusinessintelligence.
International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 57
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APPENDIX A.
continuedonfollowingpage
Table11.
Factors Questions Scale
Vision and Mission 1. Existence of documented vision and mission of the ERP project Very Low to Very High
2. The degree to which vision and mission of the ERP project are well under-
stood across the organization
Very Low to Very High
3. Existence of business plan including a justification for the investment Very Low to Very High
Goals/ Objectives 4. Existence of carefully defined goals of the ERP system Very Low to Very High
5. Existence of measurable goals of the ERP system Very Low to Very High
6. The degree to which goals of the ERP project are well understood across
the organization
Very Low to Very High
7. Existence of carefully defined project scope Very Low to Very High
8. Established realistic and achievable milestones for the ERP project Very Low to Very High
Strategic IT plans 9. The degrees to which information technology systems of the firm support
the strategic goals of the firm
Very Low to Very High
10. Existence of continuous and up to date strategic IT plans Very Low to Very High
11. Existence of written guidelines to structure strategic IT plans in the
organization
Very Low to Very High
12. The degree to which top management is involved in strategic IT plans Very Low to Very High
13. Existence of inputs from all functional areas the strategic IT plans Very Low to Very High
Formalization 14. The degree to which rules and procedures are clearly documented Very Low to Very High
15. The degree to which rules and procedures are made known to all employees Very Low to Very High
16. The degree to which rules and procedures are considered in decision making Very Low to Very High
Size 17. Number of employees (<100 , 100-5 00,5 00-
1000, 1000-10000,
>10000)
18. Annual revenues (in million US $) (<50, 50-200, 200-500,
500-1000, >1000)
19. Availability of human and financial resources assigned to the project Very Low to Very High
CIO Position 20. Existence of empowered CIO in the organization Very Low to Very High
21. Existence of CIO reporting directly to the CEO Very Low to Very High
22. Existence of strategic rather than supportive role of the CIO in the or-
ganization.
Very Low to Very High
IT Infrastructure 23. Existence of adequate hardware infrastructure. Very Low to Very High
24. Existence of adequate software and application Very Low to Very High
25. Existence of adequate networking infrastructure Very Low to Very High
Business Processes 26. Existence of documented business processes Very Low to Very High
27. Existence of business processes improvements Very Low to Very High
28. Existence of Business process understanding and perception among people Very Low to Very High
Data 29. Existence of high quality and accurate data Very Low to Very High
30. Existence of data structures converted into a single one Very Low to Very High
31. Existence of data quality control methods. Very Low to Very High
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continuedonfollowingpage
Table11.continued
Top Management
Support
32. The degree to which functional managers willingly assign resources to the
ERP project as they are needed
Very Low to Very High
33. The degree to which the need for long-term ERP support resources is
recognized by management
Very Low to Very High
34. The degree to which executive management is enthusiastic about the
possibilities of ERP
Very Low to Very High
35. The degree to which all levels of management support the overall goals
of the ERP project
Very Low to Very High
Communication 36. The degree to which open and honest information policy is communicated
to the users
Very Low to Very High
37. Existence of free flow of information in the organization Very Low to Very High
38. Existence of the scope, objectives, and change management strategies, in
the communication plan
Very Low to Very High
Organizational Culture 39. Existence of a learning and development culture Very Low to Very High
40. Existence of a participative decision making culture Very Low to Very High
41. Existence of a support and collaboration culture Very Low to Very High
42. Existence of a power sharing culture Very Low to Very High
43. Existence of tolerance for conflicts and risk culture Very Low to Very High
Human Resource
Management
44. Existence of proper mechanisms to recruit and preserve qualified employ-
ees, nurture and maintain a high levels of employee morale and motivation
among them
Very Low to Very High
45. Existence of high rate of younger employees in the organization (The
number of employees with less than 30 years old per total)
(<10, 11-20, 21-30, 31-
40, >41)
46. Existence of the high rate of more educated employees in the organization
(The number of employees with BS or higher educational degrees per total)
(<10, 11-20, 21-30, 31-
40, >41)
Training and Education 47. Existence of planning for ERP training facilities Very Low to Very High
48. Existence of a clear education and training strategy Very Low to Very High
49. Existence of the identified training needs. Very Low to Very High
50. Existence of a formal training program to meet the requirements of ERP
system users
Very Low to Very High
51. Existence of customized training materials for each specific job. Very Low to Very High
52. Targeting the entire business task, not just the ERP screens and reports
by training materials
Very Low to Very High
53. The degree to which users have been trained in basic ERP system skills
(training hours per employee)
(<10, 11-20, 21-30, 31-
40, >41)
Project Team 54. Existence of the both business and technical knowledge into the project team Very Low to Very High
55. Existence of a balanced, cooperative, cross functional and full time
project team
Very Low to Very High
56. The degree to which project team performance is fairly compensated Very Low to Very High
57. Existence of the empowered project team members. Very Low to Very High
58. The degree to which project team have prior experience in large IT projects. Very Low to Very High
International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 59
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continuedonfollowingpage
Table11.continued
Management’s Skills 59. Existence of communication skills Very Low to Very High
60. Existence of controlling skills Very Low to Very High
61. Existence of leadership skills Very Low to Very High
62. Existence of planning skills Very Low to Very High
63. Existence of IT management skills Very Low to Very High
64. Existence of interpersonal skills Very Low to Very High
IT Staff’s Skills 65. Existence of communication skills Very Low to Very High
66. Existence of IT management skills Very Low to Very High
67. Existence of planning skills Very Low to Very High
68. Existence of technical skills Very Low to Very High
69. Existence of ERP experience Very Low to Very High
70. Existence of controlling skills Very Low to Very High
Users’ Skills 71. Existence of interpersonal skills Very Low to Very High
72. Existence of communication skills Very Low to Very High
73. Existence of planning skills Very Low to Very High
74. Existence of technical skills Very Low to Very High
75. Existence of ERP experience Very Low to Very High
76. Existence of controlling skills Very Low to Very High
Shared Beliefs 77. The extent to which employees believe in the benefits of the ERP system. Very Low to Very High
78. The extent to which management team believe in the benefits of the system. Very Low to Very High
79. The extent to which employees and management believe in the benefits
of the system is alike
Very Low to Very High
Company-Wide
Commitment
80. The extent to which project gets support all functional segments of the
organization.
Very Low to Very High
81. The extent to which organizational overall goals are preferred to individual
segments goals
Very Low to Very High
82. The extent to which personnel involvement and participation in the
project are assured
Very Low to Very High
Project Champion 83. Existence of the proper project champion in the organization Very Low to Very High
84. Existence of the business, technical, personal, and managerial competen-
cies of the project champion
Very Low to Very High
85. Existence of a project champion with high official level in the organization Very Low to Very High
60 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011
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APPENDIX B.
The structure of the ERP readiness assessment questionnaire (Using 5 point scale, with values
0, 0.25, 0.50, 0.75, 1).
Table12.
.
Factors Question Reference
Vision and Mission 1. Existence of the documented vision and mis-
sion of the ERP project
(Buckhout et al., 1999; Holland & Light, 2001).
2. The degree to which vision and mission of
the ERP project are well understood across the
organization
(Shanks et al., 2000; Somers & Nelson, 2001).
3. Existence of the business plan including a
justification for the investment
(Holland & Light, 1999; Nah et al., 2003; Zhang
et al., 2003)
Goals/ Objectives 4. Existence of the carefully defined goals of the
ERP system
(Razmi et al., 2009; Soja, 2008).
5. Existence of the measurable goals of the ERP
system
(Al-Mashari et al., 2003).
6. The degree to which goals of the ERP project
are well understood across the organization
(Shanks et al., 2000; Somers & Nelson, 2001).
7. Existence of the carefully defined project scope (Bajwa et al., 2004; Bingi et al., 1999; Holland &
Light, 1999; Rosario, 2000; Shanks et al., 2000;
Somers & Nelson, 2001).
8. Established realistic and achievable milestones
for the ERP project
(Al-Mashari et al., 2003; Bajwa et al., 2004;
Holland & Light, 1999; Murray & Coffin, 2001;
Shanks et al., 2000).
Strategic IT Plans 9. The degrees to which information technology
systems of the firm support the strategic goals
of the fir.
(Fiedler, Grover, & Teng, 1996; Sampler, 1998).
10. Existence of continuous and up to date
strategic IT plans
(Stratman & Roth, 2002).
11. Existence of written guidelines to structure
strategic IT plans in the organization
(Stratman & Roth, 2002).
12. The degree to which top management in-
volves in strategic IT plan.
(Stratman & Roth, 2002).
13. Existence of inputs from all functional areas
the strategic IT plans
(Stratman & Roth, 2002).
Formalization 14. The degree to which rules and procedures are
clearly documented.
(Daft, 1998; Robbins, 1991).
15. The degree to which rules and procedures are
made known to all employees
(Daft, 1998; Robbins, 1991).
16. The degree to which rules and procedures are
considered in decision making
(Daft, 1998; Robbins, 1991).
Size 17. Number of employees (Kimberly, 1976; Swamidass & Kotha, 1998).
18. Annual revenues (Choe, 1996; Ein-Dor & Segev, 1978; Raymond,
1990).
19. Availability of human and financial resources
assigned to the project
(Grover, Jeong, Kettinger, & Teng, 1995; Nah &
Delgado, 2006; Reel, 1999; Remus, 2007).
continuedonfollowingpage
International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 61
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CIO Position 20. Existence of empowered CIO in the organiza-
tion
(Chun & Mooney, 2009).
21. Existence of CIO reporting directly to the
CEO
(Chun & Mooney, 2009).
22. Existence of strategic rather than supportive
role of the CIO in the organization.
(Chun & Mooney, 2009; Willcocks & Sykes,
2000).
IT Infrastructure 23. Existence of adequate hardware infrastructure (Al-Mashari, 2003; Al-Mashari et al., 2003;
Chuang & Shaw, 2008; Finney & Corbett, 2007;
Jarrar et al., 2000; Ngai et al., 2008; Peslak, 2006;
Soja, 2006; Umble et al., 2003; Verville et al.,
2005).
24. Existence of adequate software and applica-
tion
25. Existence of adequate networking infrastruc-
ture
Business Processes 26. Existence of documented business processes (Bingi et al., 1999; Yang et al., 2007).
27. Existence of business processes improve-
ments
(Bingi et al., 1999; Yang et al., 2007).
28. Existence of understanding of business pro-
cess among people.
(Ho & Lin, 2004; Motwani et al., 2005; Murray &
Coffin, 2001; Ward et al., 2005).
Data 29. Existence of high quality and accurate data (Bajwa et al., 2004; Somers & Nelson, 2001,
2004; Umble et al., 2003; Xu et al., 2002; Yusuf et
al., 2004; Zhang et al., 2005).
30. Existence of data structures converted into a
single one
(Somers & Nelson, 2004).
31. Existence of data quality control methods (Xu et al., 2002).
Top Management
Support
32. The degree to which functional managers
willingly assign resources to the ERP project as
they are needed
(Stratman & Roth, 2002).
33. The degree to which the need for long-term
ERP support resources is recognized by manage-
ment
(Stratman & Roth, 2002).
34. The degree to which executive management is
enthusiastic about the possibilities of ERP
(Stratman & Roth, 2002).
35. The degree to which all levels of management
support the overall goals of the ERP project
(Stratman & Roth, 2002).
Communication 36. The degree to which open and honest infor-
mation policy communicated to the users
(Bancroft, 1996; Kumar et al., 2003; Nah et al.,
2001; Sarker & Lee, 2003).
37. Existence of free flow of information in the
organization
(Sheremata, 2000)
38. Existence of the scope, objectives, and change
management strategies, in the communication
plan
(Al-Mashari et al., 2003; Bancroft, 1996; Holland
& Light, 1999; Rosario, 2000; Shanks et al., 2000;
Somers & Nelson, 2001; Sumner, 1999).
Organizational Culture 39. Existence of the learning and development
culture
(Ke & Wei, 2008).
40. Existence of the participative decision making
culture
(Ke & Wei, 2008).
41. Existence of the support and collaboration
culture
(Ke & Wei, 2008).
42. Existence of the power sharing culture (Ke & Wei, 2008).
43. Existence of the tolerance for conflicts and
risk culture
(Ke & Wei, 2008).
continuedonfollowingpage
Table12.continued
62 International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011
Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.
Human Resource
Management
44. Existence of the proper mechanisms to recruit
and preserve qualified employees, nurture and
maintain a high levels of employee morale and
motivation among them
(Bingi et al., 1999; Kim et al., 2005; Metaxiotis
et al., 2005; Skok & Legge, 2002; Trimmer et al.,
2002; Umble et al., 2003; Verville et al., 2005;
Willcocks & Sykes, 2000).
45. Existence of the high rate of younger employ-
ees in the organization
(Herold et al., 1995).
46. Existence of the high rate of more educated
employees in the organization
(Herold et al., 1995).
Training and Education 47. Existence of the planning for ERP training
facilities.
(Finney & Corbett, 2007; Rao, 2000a, 2000b)
48. Existence of the clear education and training
strategy
(Mabert et al., 2003).
49. Existence of the identified training needs. (Stratman & Roth, 2002).
50. Existence of a formal training program to
meet the requirements of ERP system users
(Stratman & Roth, 2002).
51. Existence of customized training materials for
each specific job
(Stratman & Roth, 2002).
52. Targeting the entire business task, not just the
ERP screens and reports by training materials
(Stratman & Roth, 2002).
53. The degree to which users have been trained
in basic ERP system skills
(Stratman & Roth, 2002).
Project Team 54. Existence of the both business and technical
knowledge into the project team
(Al-Mashari et al., 2003; Allen et al., 2002; Bajwa
et al., 2004; Bingi et al., 1999; King & Burgess,
2006; Shanks et al., 2000; Somers & Nelson,
2001, 2004; Sumner, 1999).
55. Existence of a balanced, cooperative, cross
functional and full time project team
(Nah et al., 2001; Rao, 2000a; Shanks et al., 2000)
56. The degree to which project team perfor-
mance fairly compensated
(Umble et al., 2003).
57. Existence of the empowered project team
members.
(Finney & Corbett, 2007; Shanks et al., 2000)
58. The degree to which project team have prior
experience in large IT projects
(Allen et al., 2002; Marsh, 2000).
Management’s Skills 59. Existence of communication skills
60. Existence of controlling skills
61. Existence of leadership skills
62. Existence of planning skills
63. Existence of IT management skills
64. Existence of interpersonal skills
(Tadinen, 2005).
IT Staff’s Skills 65. Existence of communication skills
66. Existence of IT management skills
67. Existence of planning skills
68. Existence of technical skill.
69. Existence of ERP experience
70. Existence of controlling skills
(Tadinen, 2005).
Users’ Skills 71. Existence of communication skills
72. Existence of interpersonal skills
73. Existence of planning skills
74. Existence of technical skills
75. Existence of ERP experience
76. Existence of controlling skills
(Tadinen, 2005).
continuedonfollowingpage
Table12.continued
International Journal of Enterprise Information Systems, 7(4), 23-63, October-December 2011 63
Copyright © 2011, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited.
Shared Beliefs 77. The extent to which employees believe in the
benefits of the ERP system
(Amoako-Gyampah & Salam, 2004).
78. The extent to which management team
believe in the benefits of the system
(Amoako-Gyampah & Salam, 2004).
79. The extent to which employees and manage-
ment believe in the benefits of the system is alike
(Amoako-Gyampah & Salam, 2004).
Company-Wide
Commitment
80. The extent to which project gets support all
functional segments of the organization
(Law & Ngai, 2007; Somers & Nelson, 2001,
2004; Yusuf et al., 2004; Z. Zhang et al., 2005).
81. The extent to which organizational overall
goals are preferred to individual segments goals
(Yusuf et al., 2004; Zhang et al., 2005).
82. The extent to which personnel involvement
and participation in the project are assured
(Mandal & Gunasekaran, 2002; Yusuf et al.,
2004).
Project Champion 83. Existence of the proper project champion in
the organization
(Bancroft, 1996; Legare, 2002; Nah et al., 2001;
Nah et al., 2003; Sumner, 1999).
84. Existence of the business, technical, personal,
and managerial competencies of the project
champion
(Kræmmergaard & Rose, 2002; Somers & Nelson,
2001).
85. Existence of a project champion with high
official level in the organization
(Falkowski, Pedigo, Smith, & Swanson, 1998;
Sumner, 1999).
Table12.continued
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