The Impact of Culture on ERP Implementations

A recent Standish Group report on ERP implementation projects reveals that these projects were, on average, 178% over budget, took 2.5 times as long as intended, and delivered only 30% of promised benefit, and a recent survey of 12 recent projects revealed that adapting the implementation to the prevailing cultural style was one important cause of this project underperformance (Densley 1999). These findings support anecdotal evidence for the impact of culture reported in the IT press (for example Warren, 1999). This importance of culture is hardly surprising. A customer who implements an ERP package has to change its business processes to the ERP supplier's best-practice processes (Curran and Ladd, 1998). The change both impacts on the customer's organizational culture (that is the ways that things are done in the organization) and is constrained by it. In Europe, the picture is even more complex because companies also have diverse national cultures which influence this organizational culture and make the successful implementation of multinational ERP implementations difficult, as reported in Gulla and Mollan (1999). Indeed, evidence suggests that ERP implementations in North America have been more effective because of the more complex European organizational and national cultures (Warren, 1999). If more ERP implementations are to deliver their promised benefits within budget, we need to understand how organizational and national culture impact on ERP implementations, and how this understanding will deliver better methods for implementation partners and customers to use.