1. Session 10c, 8 May 2015 IST-Africa 2015
Interdependent Enterprise Resource
Planning risks in Small and Medium-Sized
Enterprises in developing countries
Carrington Mukwasi
University of Cape Town
South Africa

2. Session 10c, 8 May 2015 IST-Africa 2015
Agenda
• Introduction
• Motivation for the study
• Research questions
• Methodology
• Findings
• Conclusions
• Future research

3. Session 10c, 8 May 2015 IST-Africa 2015
Introduction
• This study investigated casual and resultant risks
associated with the adoption of Enterprise Resource
Planning (ERP) systems in Small to Medium-sized
Enterprises.

4. Session 10c, 8 May 2015 IST-Africa 2015
Motivation
SME Sector and development
•SMEs are catalyst for economic growth [1]
•They generate employment - For example in South Africa
they account for 61% of the employment sector [2].
•The Government of Zimbabwe expected SMEs to address
the problem of unemployment and lack of foreign investment.
•In Ghana, SMEs contribute approximately 70 percent of the
GDP [1]

5. Session 10c, 8 May 2015 IST-Africa 2015
The ERP SME Market and problem area
The ERP SME Market
There is increasing ERP adoption by SMEs due to the advent of:
• low-cost ERPs,
•low-priced hardware and hosting services,
•ERPs tailored for SMEs, an electronic business marketplace and
beneficial partnerships between large enterprises and SMEs [3-9].
•The ERP market for large corporates has reached saturation point with a
higher than 70 percent adoption rate [10].

6. Session 10c, 8 May 2015 IST-Africa 2015
Problem area
• High ERP implementation failure rate [11]
• The majority of ERP deployments rarely meet user
expectations
• Several models such as Risk Diagnosing Methodology,
Characteristics analysis method (CAM), Safe methodology
and PMI have been proposed to ensure effective risk
management. However, these models have been criticised
for being too ‘general’ to be used for ERP implementations
[12].

7. Session 10c, 8 May 2015 IST-Africa 2015
Research Questions
Research gape
•Many previous studies have focused on ERP risks [3-9] yet
do not fully investigate the causal and resultant risks in ERP
implementations.
Research Questions
•What are the risks for SMEs adopting ERPs
•How do risks influence the realisation of other risks

8. Session 10c, 8 May 2015 IST-Africa 2015
Research approach, Methodology
• Research method: Qualitative
• Research strategy: Case study (drawn from Harare,
Johannesburg and Cape Town)
• Data collection: Semi structured interviews
• Data analysis: Elements of Grounded Theory

9. Session 10c, 8 May 2015 IST-Africa 2015
Major Outcomes/Results

10. Session 10c, 8 May 2015 IST-Africa 2015
Major Outcomes/Results
Risks that emerged from the study that were not previously
emphasised in literature include:
•Lack of vendor transparency
•Lack of functionality fit in module
•Incorrect system set up

11. Session 10c, 8 May 2015 IST-Africa 2015
Major Outcomes/Results

12. Session 10c, 8 May 2015 IST-Africa 2015
Conclusions
• The majority of the risks realised were unexpected and are here made
available to SMEs upfront and summarised in a Table.
• Major ERP causal risks which need to be managed are: incorrect
system setup; insufficient internal expertise; lack of consultant skills;
lack of vendor transparency and unclear or misunderstood changing
requirements.
• This study brings out the major ERP resultant risks such as lack of
information traceability and visibility, and lack of functionality fit in
module.
• These risks provide evidence for the proposition that a successful ERP
implementation is dependent on identifying causal risks and
successfully managing them to eliminate resultant risks.

13. Session 10c, 8 May 2015 IST-Africa 2015
Future research
• Future research can focus on validating the risk
interdependency framework, resultant risks and causal risks
to enhance the proposed theory.
• Applying action research involving prolonged engagement
and persistent observation of the phenomenon under
investigation might be useful to more deeply understand
how risks are realised and how they influence each other.
ZIKOMO - THANK YOU

14. Session 10c, 8 May 2015 IST-Africa 2015
References
• [1] Abor, J., & Quartey, P. (2010). Issues in SME Development in Ghana and South, Africa.
International Research Journal of Finance and Economics, Euro Journals Publishing, 39 (N/A).
• [2] Berry A., Blottnitz M., Cassim R., Kesper A., Rajaratnam, B., & Seventer, D. E. (2002). The
Economics of SMMEs in South Africa, Trade and Industrial Policy Strategies (TIPS). South Africa.
• [3] Aloini, D., R. Dulmin, and V. Mininno, Risk management in ERP project introduction: Review of the
literature. Information & Management, 2007. 44(6): p. 547-567
• [4] Poba-Nzaou, P., L. Raymond, and B. Fabi, Adoption and risk of ERP systems in manufacturing
SMEs: a positivist case study. Business Process Management Journal, 2008. 14(4): p. 530-550.
• [5] Huang, S.-M., et al., Assessing risk in ERP projects: identify and prioritize the factors. Industrial
management & data systems, 2004. 104(8): p. 681-688.
• [6] Iskanius, P., Risk management in ERP project in the context of SMEs. Engineering Letters, 2009.
17(4): p. 266.
• [7] Ojala, M., I. Vilpola, and I. Kouri. Risks and risk management in ERP Project-cases in SME
Context. In Business Information Systems (BIS). 2006. Citeseer.

15. Session 10c, 8 May 2015 IST-Africa 2015
References
• [8] Singh, L., S. Singh, and N. Pereira. Human risk factors in post-implementation phase of ERP in SMEs in
India. in Technology Management for Global Economic Growth (PICMET), 2010 Proceedings of PICMET'10:.
2010. IEEE.
• [9] Sumner, M., Risk factors in enterprise-wide/ERP projects. Journal of information technology, 2000. 15(4): p.
317-327.
• [10] Deep, A., Guttridge, P., Dani, S. & Burns, N. (2008). Investigating factors affecting ERP selection in made-
to-order SME sector. Journal of Manufacturing Technology Management, 19 (4), 430-446.
• [11] Dixit, A.K. and O. Prakash, A study of issues affecting ERP implementation in SMEs. International
• Refereed Research Journal, 2011. 2(2): p. 77-85.
• [12] Aloini, D., R. Dulmin, and V. Mininno, Risk management in ERP project introduction: Review of the
literature. Information & Management, 2007. 44(6): p. 547-567.