Why ERP Systems in Developing Countries Fail

Enterprise resource planning (ERP) systems are increasingly being used in business organisations in developing countries; also in the public and NGO sectors.  ERP promises to integrate data systems – financials, logistics, HR, etc – across the organisation; thus saving money and improving decision-making.  But the failure rate for ERP implementations is high, with particular problems found in developing country organisations.

A new research paper from the University of Manchester’s Centre for Development Informatics analyses why ERP systems in developing countries fail: https://www.gdi.manchester.ac.uk/research/publications/di/di-wp45/

It draws evidence from an in-depth Middle East case study, and first uses an analytical model based on DeLone & McLean’s work.  This gathers evidence on the success or failure of any ICT project against five evaluation criteria: system quality, information quality, use and user satisfaction, individual impact, and organisational impact.  This provides an objective basis for identifying the case study ERP system as an almost-complete failure.

A second analytical model – the design—reality gap framework – was then used to explain why this ERP implementation failed.  Using rating scale evidence gathered on seven ‘ITPOSMO’ dimensions, this shows there was a large gap between ERP system design expectations, and case organisation realities prior to implementation.

This is often true of ERP systems since they seek to make significant changes within client organisations.  However, the design—reality gap analysis was repeated later on, showing that gaps did not close during implementation, as they need to do for a successful system.

Practical recommendations for risk identification and mitigation are outlined based on closure of both specific design—reality gaps during ERP implementation, and also on a set of generic gap closure techniques such as development and use of ‘hybrid’ professionals.

In research terms, the case demonstrates the value of the DeLone/McLean model for categorisation of ERP and other information system project outcomes, and the value of the design—reality gap model for analysing project implementation, and in explaining why project outcomes occur.

A revised version of the paper has been published in the Journal of Enterprise Information Management: http://www.emeraldinsight.com/10.1108/17410391011019741

Other experiences of ERP or similar enterprise system implementations in developing countries would be welcome as comments.