Luận văn thạc sĩ UEH critical success factors of enterprise resource planning systems implementation

MINISTRY OF EDUCATION AND TRANNING

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

------------

LÊ THỊ THU CHUNG

CRITICAL SUC CESS FACTORS OF

ENTERPRISE RESOURCE PLANNING

SYSTEMS IMPLEMENTATION SUCCESS

IN VIETNAM

THESIS OF MASTER OF BUSINESS ADMINISTRATOR

HO CHI MINH CITY – 2012

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MINISTRY OF EDUCATION AND TRANNING

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

------------

LE THI THU CHUNG

CRITICAL SUCCESS FACTORS OF

ENTERPRISE RESOURCE PLANNING

SYSTEMS IMPLEMENTATION SUCCESS

IN VIETNAM

Subject: Master of Business Administrator

Code: 06.34.01.02

THESIS OF MASTER OF BUSINESS ADMINISTRATOR

ADVISOR:

DR. NGUYỄN THỊ NGUYỆT QUẾ

HO CHI MINH CITY – 2012

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ACKNOWLEDGEMENT

I would like to take this opportunity to express my gratitude to all those

who have helped and supported me during the time I conducted the study.

First of all, I would like to express my deepest gratitude to my advisor,

Dr. Nguyen Thi Nguyet Que, for her generous and patient guidance to my

thesis. Her inspiring advices are extremely essential and valuable for me to

finish this thesis. The advisor is very knowledgeable, professional, and nice to

me all the time. I feel very lucky and deeply appreciate her to give a chance to

be her student.

Secondly, I would like to show sincere gratitude to faculty members for

their enthusiastic support.

Thirdly, I would like to send special thank you to my friends, members

of ERP forum, my work partners...who supportively help me so much to

finalize the questionnaire, take part in the survey for pilot test as well as the

main study.

Lastly, I would like the send the most special thanks to my family,

especially my parents who are always there for me with so much love, care

and encouragement.

Le Thi Thu Chung

Ho Chi Minh, October 2012

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COMMITMENT

I hereby would like to commit that the thesis, “Critical success factors

of Enterprise Resource Planning systems implementation success in Vietnam”,

was accomplished based on my independent and serious studies and

researches. The data was collected in reality and it has clear origins. In

addition to that, the data would be trust-worthily handled and it has never

been released in any menu.

Le Thi Thu Chung

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TABLE OF CONTENT

ACKNOWLEDGEMENT........................................................................................ I

COMMITMENT......................................................................................................II

TABLE OF CONTENT..........................................................................................III

LIST OF TABLE......................................................................................................V

LIST OF FIGURE.................................................................................................. VI

ABSTRACT...............................................................................................................1

CHAPTER 1 INTRODUCTION .............................................................................2

1.1. Research background.....................................................................................................2

1.2. Research questions and objectives..................................................................................3

1.3. Practical significances of the study.................................................................................5

1.4. Scope and approach ........................................................................................................5

1.5. Research method.............................................................................................................5

1.6. Structure of the thesis .....................................................................................................6

CHAPTER 2 LITERATURE REVIEW.................................................................7

2.1. Definition of ERP ......................................................................................................................................................................7

2.2. Situation of ERP in Vietnam...............................................................................................................................................10

2.3. Proposed conceptual model and hypotheses ............................................................................................................11

CHAPTER 3 ............................................................................................................25

3.1. Research purpose ...............................................................................................25

3.2. Research design..................................................................................................26

3.3. Questionnaire design..........................................................................................27

3.3.1. Questionnaire development.........................................................................27

3.3.2. Questionnaire translation.............................................................................31

3.4. Research strategy ..............................................................................................32

3.4.1. Qualitative pilot study .................................................................................32

3.4.2. Quantitative pilot study ...............................................................................32

3.5. Targeted population ...........................................................................................33

3.6. Research sampling ............................................................................................33

CHAPTER 4 ............................................................................................................38

4.1. Descriptions of sample......................................................................................38

4.2. Reliability and validity of the measurement scale ............................................40

4.3. Testing the research model and the hypotheses................................................45

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4.3.2. Testing hypothesis......................................................................................49

4.3.3 Testing the moderating relationship .............................................................50

4.3.4. Description of statistics of overall ERP implementation success. ..............55

4.4. Findings..............................................................................................................56

CHAPTER 5 ............................................................................................................58

5.1. Discussion of findings........................................................................................58

5.2. Practical implications.........................................................................................59

5.3 Contribution of the current study ........................................................................61

5.4 Limitation and future research ............................................................................61

LIST OF REFERENCE ............................................................................................63

APPENDIX 1 .......................................................................................................6973

APPENDIX 2 ...........................................................................................................73

APPENDIX 3 ............................................................................................................80

APPENDIX 4 ............................................................................................................84

APPENDIX 4 ............................................................................................................87

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LIST OF TABLE

Table 2. 1: ERP systems history ............................................................................................7

Table 2. 2: Unified CSFs model by Esteve & Pastor (2000)..............................................12

Table 2. 3: 22 CSFs proposed by Somers & Nelson (2001)................................................13

Table 2. 4: seven broad categories of CSFs by Nah & Delgado (2006)..............................13

Table 2.5: Eleven key CSFs by Nah, Lau & Kuang (2003) ................................................14

Table 2. 6: Four CSFs and 1 moderator proposed by Nah et al. (2007)..............................15

Table 2.7: Measurement of ERP implementation success by Petroni (2002) .....................23

Table 3.1: Survey items in the study ..................................................................................29

Table 4.1: Sample characteristics .......................................................................................39

Table 4.2: Reliability of scales ..........................................................................................40

Table 4.3: KMO and Barlett's Test (DV) ...........................................................................43

Table 4.4: Total variance explained ....................................................................................43

Table 4.5: Rotated Component Matix(a) ............................................................................44

Table 4.6: Correlation of constructs 1 .................................................................................45

Table 4.7: Model sumary(b) (MRL) 1 .................................................................................47

Table 4.8: ANOVA (Regression) 1 .....................................................................................47

Table 4.9: Coefficients (Regression) 1 ................................................................................47

Table 4.10: Testing H1, H2, H3, H4 1.................................................................................49

Table 4.11: Model Summary of H5 1 ..................................................................................51

Table 4.12: Coefficients of H5 hierarchical regression 1 ....................................................51

Table 4.13: Model summary of H6 1...................................................................................51

Table 4.14: Coefficients of H6 hierarchical regression 1 ....................................................52

Table 4.15: Model Summary of H7 1 ..................................................................................52

Table 4.16: Coefficients of H7 hierarchical regression 1 ....................................................53

Table 4.17: Model summary of H8 1...................................................................................53

Table 4.18: Coefficients of H8 hierarchical regression 1 ....................................................54

Table 4.19: Testing H5, H6, H7, H8 1.................................................................................54

Table 4.20: Descriptive statistic of ERP 1...........................................................................55

Table 4.21: Levels of importance of factor 1.......................................................................56

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LIST OF FIGURE

Figure 2.1: Modules of ERP system .....................................................................................9

Figure 2.2: Proposed conceptual framework ......................................................................16

Figure 3.1: Research procedure ..........................................................................................26

Figure 4.1: The revised research model 1............................................................................55

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ABSTRACT

Enterprise resource planning (ERP) systems with high level of integration

can help improve capability of customer service, productivity, cost reduction,

inventory turnover and provide effective supply chain management and e-commerce.

ERP has been widely adopted in many countries, but in Vietnam it is still very

limited. Trend of globalization and fierce competition push Vietnamese enterprises

into having effective management and optimize cost. However, there have been

many failed attempts in implementing ERP systems. This research aims to examine

the critical success factors of success of ERP implementation.

The study was conducted in twenty five companies in Hochiminh, Dong Nai,

and Binh Duong (out of eighty one companies throughout Vietnam) with “go live”

ERP systems. The results of the study indicate Top management support,

Teamwork, Enterprise-wide communication and Project management program as

critical success factors of ERP implementation success. The results also show that

Organizational culture is the moderator which positively moderates the relationships

between Top management support, Teamwork, Enterprise-wide communication,

Project management program and

ERP implementation success.

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CHAPTER 1

INTRODUCTION

1.1. Research background

For the last few decades, business management strongly relies on the

information. The use of Management Information system (MIS) is being proved to

lead to better planning, better decision making and better result. MIS is defined by

Davis and Olsen (1985) as an integrated user-machine system for providing

information to support information management and decision making functions in

an organization. This study will look into one of the most advanced and

sophisticated MIS, the Enterprise Planning System (ERP) and the critical success

factors for its successful implementation.

Generally, ERP systems help organizations increase level of customer

service, productivity, cost reduction, inventory turnover and provide effective

supply chain management and e-commerce. The ERP systems are designed to

develop plans and schedules so that the right resources (manpower, material,

machinery and money) are available in the right amount when needed (Wallace and

Kremzar, 2001).

In reality, ERP implementation is costly, complicated and time-consuming.

According to survey result in 2010 by Panorama Consulting Group, on average, an

ERP project takes about 18.4 months with total cost of $6.2 mil. 51.4 % of ERP

projects exceed budget, 35.5% of projects take longer than expected duration and

40% of company face with operational disruption after “go-live”. In extreme cases,

companies have even had to close because of vast ERP investments that did not go

live, an example being the FoxMeyer Drug Company that ends into bankruptcy

(Scott and Vessey, 2002).

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