Cluster Analysis Examples

Below shows an example of a cluster analysis from a survey carried out by Statistical Information Solutions on the IT industry on behalf of a client. In this case there are 5 clusters of businesses. The question here refers to whether their business failed in the implementation of their ERPS IT systems. 

We were able to identify what kinds of business were most likely to fail in their implementation and describe them as in the example below:

Cluster 3, We don’t want ERP boss! 

7 of the 9 of these companies in this cluster had serious problems with organisational resistance to the introduction of ERP. Although these companies have not suffered much effect on their competitive edge they are very likely to have failed in implementation and get low efficiency from their ERP. These companies are all smaller, sized 50-250 users, and have a lower turnover. They are more likely to customise their system. They do not publicise their use of ERP. Retrospectively they think that a clearly defined mission is important in implementation suggesting that their implementation may have suffered from a lack of direction. However, they do tend to get a lot of internal business knowledge from their ERP system that was not there before.

We could also find clusters that showed examples of best business practice:

Cluster 1, The ERP Enthusiasts: These companies tend to be users of top end ERP packages. ERPS has no effect on these companies competitive edge. Their implementation does not tend to go over budget. Their ERP system increases control of their staff and ERP causes large changes in staff structure. These organisations publicise their use of ERP. When implementing ERP they think planning is very important. Although these companies score high on the efficiency factor they are not high on the manufacturing efficiency factor. When these companies do fail at implementation it is more likely to be for technical reasons.

Click here to see what statistical modelling can do for you