5. DATA ANALYSIS & DISCUSSIONS

Transcription

1 5. DATA ANALYSIS & DISCUSSIONS 5.1 QUESTIONNAIRE PART I (Q1- Q6) GENERAL QUESTIONS MEETING OBJECTIVE 1 & 6 FOR ALL RESPONDENTS OF THE SAMPLE POPULATION To arrive at the objective 1 and 6, comprehensive in-depth literature review was made in Chapter 2 for the period more than twenty years ( ). Questionnaire Part I (Q1 to Q6) remains almost the same for ERP Customers, Vendors & Consultants. Q1 contains the full address of the company and Q2 about the level of designation in the company. For the survey, ERP Customers (29%: Top level management, 57%: Middle level management and 14%: Junior level management), ERP Vendor (45%: Top level management, 37%: Middle level management and 12%: Junior level management), ERP Consultants (55%: Top level management, 28%: Middle level management and 17%: Junior level management) comprise the sample of population available for answering the questionnaire details. The 3Q is related with the brand of the ERP software being used in the company in which SAP tops the chart with 34%, Oracle: 29% and others (like PeopleSoft, Microsoft Dynamics, Ramco, Baan, Invensys, JD Edwards,WebERP4 World, Epicor, Sage, Navision etc.) contains 37 the primary data. Graph 1. Percentage Share of ERP Companies during (Source: SPSS V 18.0 & MS-Excel 2007) [Source: Self Made] 86

2 While the graph 2 shows the overall market share distribution for the time period from February 2005 to May The collected data conclusively shows that SAP ranks highest of the three vendors, with more than one-fifth (22-percent) of total market share. It is followed by Oracle with 15-percent of total market share and Microsoft with 10- percent of total market share. Tier II solutions (including Infor and Epicor) represent just 16-percent of the market while Tier III and others represent a commanding 37 the market. Graph 2. Percentage Share of ERP Companies during (Source: SPSS V 18.0 & MS-Excel 2007) [Source: Self Made] Q5 deals with the business area/product of the company in which 73% comprises utility area, 11% manufacturing and rest 16% comprises other areas as depicted in graph 3. Graph 3. Percentage Share of Business Area / Product of a Company (Source: SPSS V 18.0 & MS-Excel 2007) [Source: Self Made] 87

3 However, the best thing has come out in favour of ERP implementation in SMEs in terms of objectives achieved as mentioned in Q6. All respondents are unanimously agreed that more than 80% implementation objectives were achieved in terms of streamlining business process, improving productivity etc. 5.2 QUESTIONNAIRE PART I Q7 (FOR ERP CUSTOMERS) & Q4 (FOR ERP VENDORS & CONSULTANTS) WHAT ORGANIZATIONAL PARAMETERS INFLUENCED THE SELECTION OF ERP IMPLEMENTATION STRATEGY FOR SMES? [MEETING OBJECTIVE 3] ERP applications are still an expensive affair, lots of doubts about their success considering the failure-rate statistics floating on the Internet. After comparing the combined values of each variable (on Likert Scale 1 to 5) for ERP implementation strategy; the most important variable emerged from Frequencies Statistics table is Level of Commitment from Top Management (3.95%) closely followed by Information Integrity & Resource Planning (3.94%) with Availability of the Resources (3.88%) as essential qualifier with companies with meager money and resources. One is not just buying software; one is also buying into a vendor and their company culture therefore full commitment from top management is the most vital factor in the analysis. It is a given for information integrity that acceptable system s results cannot be achieved when systems are driven by inaccurate data and untimely, uncontrolled documentation. One of the major challenges in industry today is the Resource Planning i.e. timely right sizing of operations. Profit margins can be eroded by not taking timely downsizing actions, and market windows can be missed and customers lost by not upsizing the direct labour force in a timely manner. Only after acquiring all the above factors in hand, the organization is able to think Customer Satisfaction (3.8%), Change Management Technology (3.73%), Cycle Time Management (3.62%), Size of the Organization (3.60%), Need to Restandardize the Process (3.58%), BPR & Software Configuration (3.53%) factors. Lastly, Performance Management (3.46%) comes after everything else as measurement systems can be motivational or de-motivational. 88

4 Graph 4. Summated Score Analysis for Combined Data of Customers, Vendors & Consultants (Source: SPSS V 18.0 & MS-Excel 2007) [Source: Self Made] 5.3 QUESTIONNAIRE PART I Q8 OF ERP CUSTOMERS, WHAT WERE THE MOST COMMON PROBLEMS ENCOUNTERED BY SMES DURING ERP IMPLEMENTATION? [FACTOR ANALYSIS & RELIABILITY ANALYSIS] MEETING OBJECTIVES 3 & 4 The central aim of this exploratory factor analysis (EFA) is to evaluate and prioritize the most critical problems (MCPs) during ERP implementation. In effect, SMEs can take care of these problems on war footing basis to realize its sustainable success stories with most critical success factors (MCSFs). Data analysis is the process of ordering and organizing raw data so that it can provide useful information. For the group of 104 ERPs users, the data were first perused to check whether the data could be analyzed using factor analysis on not. The KMO measures the sampling adequacy which should be greater than 0.5 for a satisfactory factor analysis to proceed. Looking at the table 4 below, the KMO measure is.627 and the Bartlett's test of sphericity is significant. Taken together, these tests provide a minimum standard which should be passed before a principal components analysis (or a factor analysis) should be conducted. Kaiser-Meyer-Olkin Measure of Sampling Adequacy..627 Bartlett's Test of Sphericity Approx. Chi-Square df 105 Sig..000 Table 4: KMO and Bartlett's Test of Customer s MCPs 89

5 Communalities are the proportion of each variable's variance that can be explained by the principal components (e.g., the underlying latent continua). Also known as h 2, it can be also defined as the sum of squared factor loadings. By definition, the initial value of the communality in a principal components analysis is 1. In table 5 of common factor space, MCPs with high values are well represented, while MCPs with low values are not well represented. In this example, we don't have any particularly low values. They are the reproduced variances from the number of components that we have saved. Initial Extraction MCP 1 High Cost of ERP System MCP 2 Inability to accurately Map Business Process & IT MCP 3 Lack of Proper Management System MCP 4 Poor IT Infrastructure MCP 5 ERP Software Misfit MCP 6 Lack of Tailoring of Software MCP 7 Inaccurate Data MCP 8 Unkempt Knowledge Base MCP 9 Elongated Implementation Time MCP 10 Inability to Calculate Hidden Costs MCP 11 Lack of Proper Monitoring Systems MCP 12 Inadequate Training & Documentation MCP 13 Improper Gap Analysis MCP 14 High Turnover Rate of Project Team Members MCP 15 Lack of Will to Join World Class ERP Implementation with Lean Six Sigma Extraction Method: Principal Component Analysis Table 5. Communalities of Customer s MCPs Total Explained Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings Component Total % Total % Total % Extraction Method: Principal Component Analysis. Table 6. Total Explained of Customer s MCPs 90

6 In Table 6, Total Explained (TVE) is the third criterion in solving the number of factors problem. Factor loading shows straightforward correlation between the factors and all the MCPs. It involves retaining a component if it accounts for a specified proportion (or percentage) of variance in the data set. Eigen values are represented in the total column of the table. Eigen value MCPs (TVE) with greater than 1 value can be incorporated in final solutions. MCPs with highest Eigen value will be the most important factor and so on. Each succeeding component will account for less and less variance. % of column contains the percentage of each principal component variance. The cumulative% column contains the cumulative percentage of variance accounted by the current and all preceding principal components. For example, the last row shows a value of This means that the first five components together account for the total variance. Rotated Component Matrix (a) Factors [Most Common Problems as MCPs] Component MCP7 Inaccurate Data MCP6 Lack of Tailoring of Software MCP1 High Cost of ERP System MCP8 Unkempt Knowledge Base MCP2 Inability to accurately Map Business Process & IT MCP15 Lack of Will to Join World Class ERP Implementation with Lean Six Sigma MCP12 Inadequate Training & Documentation MCP4 Poor IT Infrastructure MCP14 High Turnover Rate of Project Team Members MCP3 Lack of Proper Management System MCP11 Lack of Proper Monitoring Systems MCP13 Improper Gap Analysis

7 MCP5 ERP Software Misfit MCP10 Inability to Calculate Hidden Costs MCP9 Elongated Implementation Time Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a Rotation converged in 6 iterations. Table 7. Rotated Component Matrix a of Customer s MCPs In Table 7 for Rotated Component Matrix, all 15 factors have reduced into five constructs. The first component is the most highly correlated with maximum component s value. After going through each row, we concentrated on the components that each variable loaded most strongly on. Based on the factor loadings, the first Factor or the most critical problem Construct 1 comprises of MCP 7, MCP 6, MCP 1, MCP 8 can be termed Project Process related Problems as Inaccurate Data and Unkempt Knowledge Base leads to High Cost of ERP for SMEs. Further Lack of Tailoring of ERP Software adding miseries to the woes. Since accurate data and knowledge base is the lifeline of proper ERP implementation; the joint efforts of consultants, vendors and customers can automate core activities of the organization by re-engineering vital business activities or by making adjustment in the software (tailoring) according to organizations requirement (Holland & Light, 2001)[47]. Taking full advantages from ERP implementation requires Business Process Reengineering (BPR) and it is achieved through an exhaustive analysis of current business processes. It helps to identify potential changes in the business processes to avoid customization of the software (Al-Mashari et al., 2002) [74]. While MCP 2, MCP 15 and MCP 12, all loaded strongly on Construct 2 Project Management related Problems which can be defined as Inability to accurately Map Business Process & IT, Inadequate Training & Documentation and Lack of Will to Join World Class ERP Implementation with Lean Six Sigma become instrumental in escalating cost, complexity and failure risk of ERP implementation. These factors badly need lean approach for immediate gain and six sigma concepts for continuous evaluation, control and improvement. In the implementation phase, training and education become other important factors. The implementing organizations must think about proper training and education from the vendors/consultants before deciding to implement a particular 92

8 ERP solution (Al-Mashari et al., 2002)[74]. Sia (2002) argued that the SMEs are evident to fail to achieve the benefits from the ERP project because of the lack of staff with appropriate education and training on technology related to the ERP systems [98]. Hence it is an important that the implementing organization evaluates whether the vendors or Suppliers of ERP solutions provide enough training and education. Johansson and Sudzina (2009) also identified that it is an important selection criteria of Open Source ERP Selection. Further, better knowledge about Lean ERP is suitable strategic method for achieving SME s objectives [54]. Later MCP 4, MCP 14 and MCP 3 loaded strongly on Construct 3 Project Implementation related Problems as Poor IT Infrastructure, High Turnover Rate of Project Team Members and Lack of Proper Management System. These issues occur all the time, typically due to poor planning or a lack of proper execution of the project. Simply buying an ERP system is not a quick fix for a business. Implementing a system requires a concerted effort across an organization. If companies are unable to administer proper implementation techniques, it may be best to contact a managed services provider that can assist with ERP operations and allow business to profit from their investment. By optimizing project management for better ERP implementation, too much software modifications or tailoring can also be prevented. The Construct 4 contains MCP 11, MCP 13 and MCP 5 can be summarized as Change Management related problems tells that Lack of Proper Monitoring, Improper Gap Analysis and ERP Software Misfits lead to Cost Overruns. While ERP systems, in theory, are acquired to assist in efficient, cost-saving strategies; improper functioning without change management could end up costing more money in continuous maintenance and convoluted operations. Without using best practices with the changing environment, involving the procurement and implementation of a solution, an ERP system could in fact make matters worse. Further, the MCP 10 and MCP 9 define Construct 5 as Hidden Hurdles for SMEs. It reflects in Elongated Implementation Time and Inability to Calculate Hidden costs. In addition to the cost of purchase, most organizations often fail to factor in hidden costs during evaluation, consulting, implementation, training, transition, delayed ROI and post implementation support. All the above factors can lead to cost overruns, schedule 93

9 overruns and functionality overruns. This ultimately results in negative ROI and a prolonged payback period. Elongated implementation time often leads to fatigue, stressed and dubious state of mind in customers which affect the growth period of ERP, to a greater extent. After examining factor scores for all the five constructs, reliability test was conducted separately. Reliability analysis is determined by obtaining the proportion of systematic variation in a scale, which can be done by determining the association between the scores obtained from different administrations of the scale. Thus, if the association in reliability analysis is high, the scale yields consistent results and is therefore reliable. Cronbach's alpha is a measure of internal consistency (reliability), i.e.; how closely related a set of items are as a group. A "high" value of Cronbach alpha as depicted in table 8 (Construct 1 scored.832), table 9 (Construct 2 scored.839) as quite good suggesting that the items have relatively high internal consistency, table 10 (Construct 3 scored.730) and table 11 (Construct 4 scored.712) as OK. Table 11 constructs having low value of alpha could be poor interrelatedness between items that can be further revised or discarded. Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items Table 8. Reliability Statistics for Construct 1 Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items Table 9. Reliability Statistics for Construct 2 Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items Table 10. Reliability Statistics for Construct 3 Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items Table 11. Reliability Statistics for Construct 4 Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items Table 12. Reliability Statistics for Construct 5 94

10 In conclusion, the results are completely a root cause analysis for SMEs where actual results are below goals or when goal are significantly below external benchmarks. SMEs 10 years back could manage without ERP, but no more! Optimized Project Management and Change Management are about setting expectations that lessen the pain of change. If Indian SMEs can adapt the ERP software with only essential customization/tailoring, not only can it benefit by the global practices incorporated in the system, but also save huge money and time. Thus cost of an ERP depends on the management s willingness to go with the ERP or the extent of tailoring it needs. Besides ERP can be the road to prosperity if one can implement world class ERP to product and process improvement/ benchmarking through the effective use of statistical methods in Lean Six Sigma skills. In view of the above result and discussions, with all its pros & cons clubbed together, the journey to MCPs to MCSFs is safe and feasible reality for SMEs towards a sustainable growth of ERP. 5.4 QUESTIONNAIRE PART I Q5 OF ERP VENDORS WHAT ARE THE MOST COMMON PROBLEMS VIEWED BY VENDORS DURING ERP IMPLEMENTATION? [FACTOR ANALYSIS & RELIABILITY ANALYSIS] MEETING OBJECTIVES 3 & 4 Part 1 Q5 investigates the most common problems (MCPs) viewed by ERP Vendors during ERP implementation. The KMO and Bartlett s test in table 13 was in favour of factor analysis with KMO measure of sampling adequacy is.630 for the group of 70 ERP Vendors. TVE (in table 14) and Scree plot for the data show cumulative percentage of variance accounted by the first five components (having Eigen value > 1) together contain a value of of the total variance. KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy.630 Bartlett's Test of Sphericity Approx. Chi-Square df 120 Sig..000 Table 13. KMO and Bartlett's Test for MCPs of Vendors 95

11 Component Total Explained Extraction Sums of Squared Rotation Sums of Squared Initial Eigenvalues Loadings Loadings Total % Total % Total % dimension Extraction Method: Principal Component Analysis. Table 14. Total Explained of MCPs of Vendors Graph 5. Scree Plot of TVE for Vendor s MCPs 96

12 In Rotated Component Matrix as depicted in table 15, all 16 MCPs as variables have reduced into five characteristics/ constructs. Rotated Component Factors of MCPs Component MCP2 Inability to accurately Map Business Process & IT MCP13 Inadequate Training & Documentation MCP16 Lack of Will to Join World Class ERP Implementation with Lean Six Sigma MCP7 Cost Overruns MCP8 Inaccurate Data MCP1 High Cost of ERP System MCP6 Lack of Tailoring of Software MCP5 ERP Software Misfit MCP9 Unkempt Knowledge Base MCP4 Poor IT Infrastructure MCP15 High Turnover Rate of Project Team Members MCP3 Lack of Proper Management System MCP12 Lack of Proper Monitoring Systems MCP14 Improper Gap Analysis MCP11 Inability to Calculate Hidden Costs MCP10 Elongated Implementation Time Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 6 iterations. Table 15. Rotated Component Matrix a of Vendor s MCPs Further Item analysis/ Reliability analysis helps in evaluating the correlation of related survey items with only a few statistics. Most important is Cronbach's alpha, a single number that tells that how well a set of items measures a single characteristic. This statistic is an overall item correlation where the values range between 0 and 1. Values above 0.7 are often considered to be acceptable. In the same way, a group of 4 questions Q5b, Q5m, Q5p and Q5g can be summarized in Project management related problems with ERP & lean six sigma with Cronbach s Alpha value.850 (Good) as the foremost and most important factor. Second construct/characteristics can be defined as Project process related problems having Cronbach s Alpha value.808 (Good). The third construct Project implementation related problems having α value.697 (nearly Good) and the fourth construct Change management related factors construct with α value 97

13 .613 and the fifth one Hidden hurdles for SMEs (α value.528) suggest that respondents gave markedly different ratings which can be adjusted further. 5.5 QUESTIONNAIRE PART I Q5 OF ERP CONSULTANTS WHAT ARE THE MOST COMMON PROBLEMS VIEWED BY CONSULTANTS DURING ERP IMPLEMENTATION? [FREQUENCY ANALYSIS ON LIKERT SCALE 1 TO 5] MEETING OBJECTIVES 3 & 4 To know how to get the best from an ERP package, it is important to first analyze the key factors that are responsible for ERP failures. According to ERP Consultants, lack of proper monitoring system (on the whole) is the leading problem (4.33%), leaving project management (as a part of whole system) far behind (3.73%). It needs top management intervention at the priority basis. Elongated implementation time coupled with inadequate training and documentation (4.2%) sequenced by combined effect of high cost of ERP system with lack of tailoring of ERP software (4.13%) are the next major headache related with project management related problems. Graph 6: MCPs Encountered by SMEs Consultants (Source: SPSS V 18.0 & MS-Excel 2007) [Source: Self Made] Next frequent problems come under the purview of change management & software engineering related areas. These are improper gap analysis (4.10), inability to accurately map business process & IT (3.90), high turnover rate of project team members (3.8), poor IT infrastructure (3.77%), a mixed effect of inaccurate data, unkempt knowledge base (3.73%), lack of will to join world class ERP implementation with lean six sigma 98

14 (3.63%) and ERP software misfit. Obviously, inability to calculate hidden cost (3.37%) comes in last but this ultimately results in negative ROI and a prolonged payback period. 5.6 QUESTIONNAIRE PART I Q9 OF ERP CUSTOMERS, WHAT THE END CUSTOMER OF SMES IS LOOKING FROM THE ERP SOFTWARE? [FACTOR ANALYSIS][MEETING OBJECTIVE 3] The topic of the questionnaire is very relevant and the terms coined as end customer factors (ECF1 to ECF8) to denote the concepts used here. For the group of 104 ERP customers, the KMO measure of sampling adequacy in table 16 is.619 and the Bartlett's test of sphericity is.000 (less than 0.05) is noteworthy to conduct factor analysis. As shown in table 17, TVE table and Scree plot for the data show collective percentage accounted by the first four major components around of the total variance. KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy..619 Bartlett's Test of Sphericity Approx. Chi-Square df 28 Sig..000 Table 16. KMO Bartlett's Test for ECF Analysis of Customers TVE Table Component Extraction Sums of Squared Rotation Sums of Squared Initial Eigenvalues Loadings Loadings Total % Total % Total % dimension Extraction Method: Principal Component Analysis. Table 17. Total Explained for ECF Analysis for Customers 99

15 By using rotation method (Varimax with Kaiser Normalization), 8 factors have reduced into four constructs. ECFs for ERP Selection Component ECF7 Focused Performance Measure ECF6 Data Conversion & Integrity ECF8 Ease of Customization ECF5 Vendor Customer Relationship ECF1 Fast Turnaround ECF4 Low Unit Cost ECF2 High Quality of Product ECF3 User Friendliness Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 8 iterations. Table 18. Rotated Component Matrix a for ECF Analysis for Customers In conclusion, the most important characteristics that have emerged in the scenario can be contrived as Lean ERP, which the end customer is looking for. Vendor customer relationship for fast turnaround comes at the next position, thirdly User benefit and lastly User friendliness. 5.7 QUESTIONNAIRE PART I Q6 FOR ERP VENDORS, WHAT SALE CRITERIA OF ERP IS THE MOST IMPORTANT FOR ERP VENDORS? [FACTOR ANALYSIS] [MEETING OBJECTIVE 3] In table 19, the KMO measure of sampling adequacy is.598 and the Bartlett's test of sphericity is.000, enough to conduct factor analysis. TVE table for the data show collective percentage accounted by the first three major components around of the total variance. KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy..598 Bartlett's Test of Sphericity Approx. Chi-Square df 28 Sig..000 Table 19. KMO and Bartlett's Test for Sale Criteria of Vendors (Source: SPSS V 18.0) [Source: Self Made] 100

16 Component Total Explained Extraction Sums of Squared Rotation Sums of Squared Initial Eigenvalues Loadings Loadings Total % Total % Total % dimension Extraction Method: Principal Component Analysis. Table 20. Total Explained for Sale Criteria of Vendors By using rotation method (Varimax with Kaiser Normalization), 8 factors have reduced into three constructs only in comparison of four for ERP customers (as mentioned in table 21). From the Vendor point of view, the most important requirement for the user is again Lean ERP with one feature extra as high quality of product that the user craves for. At the second place, User friendliness and lastly, User benefit in terms of vendor customer relationship. It is really surprising to note here that low unit cost does not carry much importance in comparison of high quality of product. Rotated Component Matrix a SALE CRITERIA FOR ERP VENDORS Component Focused Performance Measure High Quality of Product Ease of Customization Data Conversion & Integrity User Friendliness Fast Turnaround Vendor Customer Relationship Low Unit Cost Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a. Rotation converged in 5 iterations. Table 21. Rotated Component Matrix a for Sale Criteria of Vendors 101

17 5.8 QUESTIONNAIRE PART I Q6 OF ERP CONSULTANTS, WHAT THE END CONSULTANT IS LOOKING FROM THE ERP SOFTWARE? [FREQUENCY ANALYSIS ON LIKERT SCALE 1 TO 5] [MEETING OBJECTIVE 3] From the survey, it is clear that High quality of product (4.43%) with Ease of customization (4.3%) & Fast turnaround (4.23%) commands the topmost position for the Consultants just as Customer s requirement list. SMEs require flexibility of the ERP system (tailoring / optimizing parameters) because of their individual operational process. Data conversion and integrity (4.20%) is the next important prerequisite, sequenced by Vendor-Customer relationship & Focused Performance Measure (having same rating of 4.10%). Unexpectedly, Low unit cost (3.63%) matters least for them followed by User friendliness (4.0%) as they emphasis most on best quality of product. Graph 7: End Customer s Factors (ECFs) for Consultants (Source: SPSS V 18.0 & MS-Excel 2007) [Source: Self Made] 5.9 QUESTIONNAIRE PART I Q10 FOR ERP CUSTOMERS, Q7 FOR ERP VENDORS & CONSULTANTS, HOW SMES MAKE DECISION FOR SELECTING AN ERP VENDOR? [COMPARATIVE FREQUENCY ANALYSIS WITH SUMMATED SCORES FOR ALL RESPONDENTS] [MEETING OBJECTIVE 3] ERP Vendor Selection process can be a very complicated and problematic for SMEs if they don't know how to approach it from the very start. Different clients have different needs ranging from functional requirements, technical maturity, tolerance for risk, budget, and a host of other factors. These variables influence not only the choice of vendor, but also the choice of specific solution offered by the vendors. Since the number 102

18 of decision factors (DF1to DF7) is less for the criterion set for ERP Customers, Vendors and Consultants, we opt for combined frequency analysis in which the maximum summated score gained by the factor Vendor Credentials (4.29%). Reputation of the vendor is the most important factor for selecting the vendor and is fully supported by the primary and secondary data of the Survey. SAP tops the chart with 34%, Oracle: 29% and others (like PeopleSoft, Microsoft Dynamics, Ramco, Baan, Invensys, JD Edwards,WebERP4 World, Epicor, Sage, Navision etc.) contains 37 the primary data. The secondary report shows that majority of companies (77 percent) adopted Tier I ERP software in which people refer SAP: 35 percent, Oracle: 28 percent, Microsoft: 14 percent and Tier II: 23 percent. Flexibility / Well Managed User Interface (4.21%) is the second major factor, sequenced by Total Cost of the ERP system (4.11%), ERP Functionality (4.9%) and other factors also have more than 4 value. Maintenance (3.75%) reaches to the last of ladder (in between Agree and Neutral of Likert scale) as it is self managed by the IT staff of the company. Graph 8: ERP Vendor s Selection Factors for All Respondents (Source: SPSS V 18.0 & MS-Excel 2007) [Source: Self Made] 103

19 5.10 QUESTIONNAIRE PART I Q11 FOR ERP CUSTOMERS AND PART1 Q8 FOR ERP VENDORS & CONSULTANTS WHAT IS THE BEST WAY OF ERP SOFTWARE TAILORING/ ADAPTING? [COMPARATIVE FREQUENCY ANALYSIS WITH SUMMATED SCORES OF ALL RESPONDENTS] [MEETING OBJECTIVE 5] The next important modification in implementation phase can be made by optimization / tailoring of parameters (called configuration), rather than by traditional programming. In all options, Data fit of ERP and User Fit of ERP (4.34%) get the maximum representation of the data from the combined samples of all respondents. The next factor Process Fit of ERP with 4.31% scores gives a tough competition to both the factors. Organization Fit of the ERP (4.00%) is also a strong variable especially in SMEs in which scarcity of the five M's : men, machines, methods, materials and money is the precious word to deal with. Consultant fit of ERP is the last option with 2.84% score on Likert scale in between Neutral and Disagree. The representation found in survey result may be useful for helping practitioners assess risk and plan appropriate risk mitigation efforts. The basis for the analysis can be the whole project or a specific area of the project, e.g. production planning and control in one line of business. The ERP package tailoring typology can also be used to predict success both during the initial implementation phase and during the maintenance and post implementation phase of the ERP system life cycle. Graph 9: ERP Software Tailoring for All Respondents (Source: SPSS V 18.0 & MS-Excel 2007) [Source: Self Made] 104

20 5.11 QUESTIONNAIRE PART II OF ERP CUSTOMERS ABOUT LATEST TREND IN ERP [FACTOR ANALYSIS & RELIABILITY ANALYSIS] [MEETING OVERALL OBJECTIVES OF THE RESEARCH ] For the group of 104 ERPs users, the data were first perused to check whether the data could be analyzed using factor analysis on not. As in Table 22, we notice that the Kaiser- Meyer-Olkin measure of sampling adequacy is.855 which is quite high same as excellent. Therefore, factor analysis will prove helpful in reducing twenty variables into the smaller one based on common dimensions, characteristics or features. KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy..855 Bartlett's Test of Sphericity Approx. Chi-Square df 190 Sig..000 Table 22. KMO and Bartlett's Test for ERP Customers Meeting Overall Objectives of the Research From table 23 and Graph 10 for Scree plot, only factors with Eigen value (total variance explained) greater than 1 are included in final solutions of the analysis. Component dimension0 Initial Eigenvalues Total % Total Extraction Sums of Squared Loadings % Total Rotation Sums of Squared Loadings % Table 23. TVE for ERP Customers Meeting Overall Objectives of the Research (Source: SPSS V 18.0) [Source: Self Made] 105

21 Graph 10. Scree Plot of PC Number for ERP Customers Meeting Overall Objectives of the Research Factor loading shows the simple correlation between the factors and all the variables which can be further used to fix on which variable belongs to which factors. The PCs are ordered and assigned a number label, by decreasing order of contribution to total variance. The PC with the highest loading or with the largest fraction contribution is labeled with new label name for the emerged factors. Rotated factor matrix is the best solution for this. In table 24, each variable belongs to the factors with which it has the highest loading. From this process, we are able to find out all the constituent variables of each factor. It is seen from the TVE table that only 3 factors have Eigen value over 1. variance of % also proves that a good factor analysis has been done. The factor analysis performed on 20 items resulted into the extraction of 3 components. Table 24 : Rotated Component Matrix (Source: SPSS V 18.0) Component F15 Is Lean Six Sigma useful for managing other IS (Information Projects) similar to ERP? F7 SMEs can use the Benchmark Analysis of other companies to maximize the benefits F19 Network with similar companies brings quicker results

22 F14 Does Lean Six Sigma makes the system less vulnerable and more foolproof with the risks related to SMEs? F5 ERP's Software Development Life Cycle (SDLC) explicates the process of Lean Six Sigma implementation. F8 Is Control independent Lean expertise needed to help ERP team in selecting right software, implement effectively and manage organizational change? F12 Six sigma improves the way for overall quality of products in measurable terms F6 Before ERP implementation, SMEs must use the information regarding Lean Six Sigma from other companies F1 Heavy ERP Tailoring Increases Cost and Complexity F11 Implementation of Lean Six sigma reduces project completion time and cost remarkably. F18 Is Education of the top management accountable for success of ERP implementation for SMEs. F17 Too much software modifications can increase maintenance cost, complexity and failure risk for SME's ERP implementation. F16 Using Lean Six Sigma tools, SMEs can improve the ERP processes by eliminating Wastes (time, money, material, effort, knowledge etc) F4 Efficient Project Management and Change Management are critical to the Success of ERP industry F13 Can lean approach improves the decision making capabilities of SMEs? F9 Lean approach to Six Sigma driven by Senior Management always. F2 Lack of Knowledge transfer at any stage of Indian ERP implementation leads to dissatisfaction F20 In different companies, implementation of six sigma brings different results in terms of percentage of objectives achieved. F10 Every level of management is responsible for the success of Lean six sigma F3 Lean Six Sigma suitable strategic method for ERP implementation for SMEs Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Table 24. Rotated Component Matrix for ERP Customers Meeting Overall Objectives of the Research The Rotated Component Matrix in table 24 above shows the factor loadings for each variable. On the basis of the content, feature, characteristics of each component, suitably names are assigned to each factor. In this way, factor analysis is used here to identify the basic constructs that influence the latest trends of ERP implementation at Indian SMEs. 107

23 After going through each row, we concentrated on the components that each variable loaded most strongly on. Based on the factor loadings, the first construct or the most important factor Factor 1 comprises of F1 F5 F6 F7 F8 F11 F12 F15 F14 F19 can be renamed as Aligning Lean Six Sigma to ERP brings better results for SMEs. While F4 F13 F16 F17 F18 all loaded strongly on Factor 2 which can be defined as Education of the top management is instrumental in optimizing project management & change management process for better ERP implementation. In effect of this, too much software modifications or tailoring can be prevented that results in reduced cost, complexity and failure risk of ERP implementation for SMEs. Later F2 F3 F9 F10 F20 loaded strongly on Factor 3. The Factor 3 can be summarized as For all level of management, better knowledge about Lean ERP is suitable strategic method for achieving SME s objectives. Though lean approach to six sigma always driven by senior management, every level of management is responsible for its success. These are concentration-intensive tasks applicable on all level. Lack of knowledge transfer at any stage of Indian ERP implementation leads to dissatisfaction and bad performance. Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items Table 25. Reliability Statistics for Construct 1 for ERP Customers Meeting Overall Objectives of the Research Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items Table 26. Reliability Statistics for Construct 2 for ERP Customers Meeting Overall Objectives of the Research Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items Table 27. Reliability Statistics for Construct 3 for ERP Customers Meeting Overall Objectives of the Research After examining factor scores for all the three constructs, reliability test was conducted separately. A "high" value of Cronbach alpha in table 6, table 7 and table 8 for Construct 1 scored.917 as excellent, Construct 2 scored.872 and Construct 3 scored.841 also as very good. Therefore high association in reliability analysis shows the consistent and reliable result, fulfilling all the objectives defined in the paper. 108

24 In view of the above analysis and discussions, subsequent to the exploratory study of current ERP implementation status in India, we can conclude that optimizing software engineering, project management and lean six sigma techniques lead to successful and pragmatic implementation of ERP in SMEs as represented beneath in theoretical model in figure 8. A THEORETICAL FRAMEWORK OF ERP IMPLEMENTATION FOR SMEs Optimized Software Engineering Process Optimized Project Management Process A Journey of Excellence to Next-Gen ERP for SMEs Lean Six Sigma Figure 8. Result based Model of SME s Next-Gen ERP towards Journey of Excellence (Source: MS PowerPoint 2007) [Source: Self Made] Since ERP's software development life cycle (SDLC) explicates the process of lean six sigma implementation, it must modify ERP system functionality with customer requirements and change management that will allow SMEs to get the benefits of its use and will also help in getting the right results, in the right timeframe, at the right cost as mentioned in figure 9 below. Figure 9: ERP Software Development Life Cycle with Lean Six Sigma (Source: MS PowerPoint 2007) [Source: Self Made] 109

25 Before ERP implementation, SMEs can use the benchmark analysis of other companies to maximize the benefits. Control independent Lean expertise needed to help ERP team in selecting right software, implement effectively and manage organizational changes at all level. At the same time, Six Sigma improves the way for overall quality of products in measurable terms [151]. If companies considerably concentrate on these points, they will survive, thrive profitably in the future ERP market QUESTIONNAIRE PART II OF ERP VENDORS ABOUT LATEST TREND IN ERP [FACTOR ANALYSIS & RELIABILITY ANALYSIS] [MEETING OVERALL OBJECTIVES OF THE RESEARCH ] The KMO measure of sampling adequacy is.839 for the group of 70 ERP Vendors which is really good and the Bartlett's test of sphericity is.000 (less than 0.05) is also significant. These observations provide the ground for principal components analysis (or a factor analysis) to be conducted. KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy..839 Bartlett's Test of Sphericity Approx. Chi-Square df 190 Sig..000 Table 28. KMO and Bartlett's Test for ERP Vendors Meeting Overall Objectives of the Research TVE table 29 and Scree plot in Graph 11 for the data show cumulative percentage of variance accounted by the first four components (having Eigen value > 1) together contain a value of of the total variance. Component Total Initial Eigenvalues % Total Extraction Sums of Squared Loadings % Total Rotation Sums of Squared Loadings %

26 Extraction Method: Principal Component Analysis. Table 29: TVE for ERP Vendors Meeting Overall Objectives of the Research Graph 11. Screed Plot of PC Number for ERP Vendors [Meeting Overall Objectives of the Research] 111

27 In Rotated Component Matrix table 30, all 20 factors have reduced into four constructs instead of three construct for the factor analysis done for 104 ERP users. Surprising all the constructs for vendors can be summarized in the same way as the previous one with the addition of fourth one which can be termed as Proper training and education are necessary for all level of management for successful ERP implementation. Rotated Component Matrix (a) FACTORS 112 Component F15 Is Lean Six Sigma useful for managing other IS (Information Projects) similar to ERP? F7 SMEs can use the Benchmark Analysis of other companies to maximize the benefits F14 Does Lean Six Sigma make the system less vulnerable and more foolproof with the risks related to SMEs? F12 Six sigma improves the way for overall quality of products in measurable terms F8 Is Control independent Lean expertise needed to help ERP team in selecting right software, implement effectively and manage organizational change? F6 Before ERP implementation, SMEs must use the information regarding Lean Six Sigma from other companies F19 Network with similar companies brings quicker results. F1 Heavy ERP Tailoring Increases Cost and Complexity F13 Can lean approach improve the decision making capabilities of SMEs? F17 Too much software modifications can increase maintenance cost, complexity and failure risk for SME's ERP implementation F18 Is Education of the top management accountable for success of ERP implementation for SMEs F16 Using Lean Six Sigma tools, SMEs can improve the ERP processes by eliminating Wastes (time, money, material, effort, knowledge etc) F4 Efficient Project Management and Change Management are critical to the Success of ERP industry F11 Implementation of Lean Six sigma reduces project completion time and cost remarkably F10 Every level of management is responsible for the success of Lean six sigma F3 Lean Six Sigma suitable strategic method for ERP implementation for SMEs F5 ERP's Software Development Life Cycle (SDLC) explicates the process of Lean Six Sigma implementation F20 In different companies, implementation of six sigma brings different results in terms of percentage of objectives achieved F9 Is Lean approach to Six Sigma driven by Senior Management always? F2 Lack of Knowledge transfer at any stage of Indian ERP implementation leads to dissatisfaction Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a Rotation converged in 11 iterations. Table 30. Rotated Component Matrix for ERP Vendors [Meeting Overall Objectives of the Research]

28 Thereafter, Reliability analysis performed on all the four constructs resulted in Cronbach s Alpha value.902 (Excellent),.852(Good),.801(Good) and.804 (Good) respectively (showing very good interrelation all variables within the construct and strongly supporting the result meant for ERP Vendors. Reliability Statistics Cronbach's Alpha N of Items Table 31. Reliability Statistics for Construct 1 for ERP Vendors Meeting Overall Objectives of the Research Reliability Statistics Cronbach's Alpha N of Items Table 32. Reliability Statistics for Construct 2 for ERP Vendors Meeting Overall Objectives of the Research Reliability Statistics Cronbach's Alpha N of Items Table 33. Reliability Statistics for Construct 3 for ERP Vendors Meeting Overall Objectives of the Research Reliability Statistics Cronbach's Alpha N of Items Table 34. Reliability Statistics for Construct 4 for ERP Vendors Meeting Overall Objectives of the Research 113

29 5.13 QUESTIONNAIRE PART II OF ERP CONSULTANTS ABOUT LATEST TREND IN ERP, [FREQUENCY ANALYSIS ON LIKERT SCALE 1 TO 5] [MEETING OVERALL OBJECTIVES OF THE RESEARCH ] As factor analysis is suitable for a large number of respondents only, comparatively frequency analysis is the more viable option for the data obtained by the direct interaction with 30 ERP Consultants in Delhi-NCR areas (mentioned below in graph 12). Graph 12. Frequency Analysis of ERP Consultants [Meeting Overall Objectives of the Research] (Source: SPSS V 18.0 & MS Excel 2007) [Source: Self Made] Unanimously consultants are giving maximum choice (4.53%) in favour to avoiding too much software modification for ERP as it can increase maintenance cost, complexity and failure risk for SME s ERP implementation. To avoid this lacuna, they are positively looking the application of lean six sigma with ERP processes (with 2 nd most effective rating of 4.47%). Thirdly, as lack of knowledge transfer at any stage will prove disastrous, education of the top management is considered necessary (4.4%). Fourthly, in view of that efficient project management and change management can prove critical to the success of ERP industry (4.2%). Fifthly, SMEs can use benchmark analysis of other companies to maximize the benefits as people look lean six sigma for making the system less vulnerable and more fool proof with the risks related to SMEs. It also helps 114

30 in improving the ways for overall quality of product in measurable terms (4.13%). Other process related issues arise in between and the least consensus (3.3%) received for the statement Lean approach to six sigma is driven by senior management always draws the flak as every level of management is responsible for its success. 115