Is Closed Communication a Major Hindrance in an Enterprise Resource Planning Implementation? A Case Study of an Indonesian Family-Owned Company

Yanki Hartijasti,Arry Septian

doi:10.7454/mssh.v19i2.3480

Abstract

The high risk of failure associated with the implementation of enterprise resource planning (ERP) system relates to resistance among employees by rejecting or sabotaging the system. Communication has been identified as a critical success factor on ERP implementation in several studies, whereas, many others do not depict any relation at all. The current study, however, argues that communication regarding the benefits of ERP system is the most critical success factor for the accomplishment of ERP implementation in family-owned company in Indonesia. Empirical data from 116 ERP users were examined by using logistic regression, which reveals that communication has significant negative effect on ERP implementation. It means the more company practices closed communication, the lesser success of ERP implementation will be achieved. Findings show that closed communication leads to poor coordination between departments which reduces the speed of problem solving in the field and causes ERP implementation in PT ABC to not be fully utilized.

Highlights

Responding to the increased competition and fast-changing business environment, many companies have felt the urgent need to integrate and incorporate business functions into a single system
Communication has been identified as a critical success factor on enterprise resource planning (ERP) implementation in several studies, many others do not find any relations at all. Based on these controversies and challenges during ERP implementation faced by PT ABC, this paper argues that communication is the most critical success factor during the implementation of ERP system in family-owned company to avoid misunderstanding which may lead to employees’ rejection or sabotage actions
This study found that communication had a significant negative effect on ERP implementation (Table 3)

Summary

Introduction

Responding to the increased competition and fast-changing business environment, many companies have felt the urgent need to integrate and incorporate business functions into a single system. Considering that ERP implementation is complex, this system must be communicated well to lower-level employees who are the end-users of this system, so that they are willing to go through the implementation process and will not resist it. ERP systems were used to support its business process and manage company operation within PT ABC head office, branch, stores and distribution center.

Results

Conclusion