Building a system dynamics simulation model in support of ERP project implementation

An Enterprise Resources Planning (ERP) system is classified as a cross-functional enterprise-wide information system that integrates all departments and automates business processes across a company. The integrated approach can bring a tremendous payback if companies have planned well for implementation. Previous studies show that the challenges in ERP project implementation can affect most major departments and tend to create changes in many business processes. The problems related to ERP project implementation have become increasing multifaceted, uncertain, and interrelated. This research develops a theoretically sound and suitable comprehensive system model for the simultaneous analysis of ERP implementation processes. This study examines the critical factors of ERP implementation challenges in order to identify the key components causing the failures. These key components serve as foundation information to build a conceptual system model that analyzes the ERP project implementation system components and their cause-effect relationships. In addition, the study constructs a dynamic, graph-based operational System Dynamics model that can simulate the process of ERP system implementation to explore the different implementation system behavior under different policy change settings. The System Dynamics simulation model can demonstrate the impact of ERP implementation issues and serve as an information system implementation laboratory to perform policy formulation and testing by evaluating the performance and behavior of model variables. The result of the study contributes to the understanding of the changes derived by an ERP system implementation that can guide ERP decision makers and administrators for planning and strategic purposes.