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Global Development Institute

Explaining ERP Failure in Developing Countries: A Jordanian Case Study

Ala'a Hawari & Richard Heeks

Abstract

Enterprise resource planning (ERP) systems are increasingly being adopted by organisations in developing countries.  As in industrialised countries, this adoption seems beset by significant rates of failure, leading to a large waste of investment and other resources.  This paper seeks to understand why ERP failure occurs.

In doing this, it moves beyond the factor lists that have so-far dominated analysis.  Instead, it makes use of the "design—reality gap" model.  This conceptual framework aims to be comprehensive but also contingent; sensitive to the specific conditions of any individual client organisation.

The design—reality gap model is applied to a case study of partial ERP failure in a Jordanian manufacturing firm.  The model analyses the situation both before and during ERP implementation.  It finds sizeable gaps between the assumptions and requirements built into the ERP system design, and the actual realities of the client organisation.  It is these gaps – and the failure to close them during implementation – that underlie project failure.

The paper draws conclusions about good practice in ERP implementation relating to both risk identification and risk mitigation, and offers examples of both specific and generic actions that can be undertaken.  But it also notes challenges existing in some developing country contexts that may continue to constrain the effective use of enterprise resource planning systems.

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Educator's guide

Synopsis questions

  1. What is ERP and what are its overall pros and cons?  [Part A]
  2. What models can be used to assess and explain the success or failure of ERP systems, and how do they build on earlier ideas?  What research methods were used here?  [Part B]
  3. Was this ERP system a success or failure: justify your response?  [Part C]
  4. What were the design—reality gaps before and after implementation, and how do these help to explain the system outcome?  [Part D]
  5. What practical recommendations can be made for Beta as a result of this design—reality gap analysis, and what might constrain their achievement?  [Part E]
  6. How does the design—reality gap model move beyond previous work, and what are its practical implications?  [Part F]

Development questions

  1. Is ERP implementation still a current issue in developing countries, or has the focus of attention moved on to other systems?
  2. Is the design—reality gap model only relevant for analysis of IS in developing countries, or can it be used with industrialised country cases as well?
  3. The design—reality gap model is used here post hoc as an analytical tool.  How could it be used during an IS project as a risk identification and mitigation tool?
  4. Do models like the one shown here have any real-world value, or are they just used by academics to try to boost their own profile?
  5. If you were an independent consultant advising a developing country firm, would you advise them to adopt ERP or not?