ERP Software Selection Process
There are various software vendor selection models. Hence, it is crucial for organisation to select the right Enterprise Resource Planning (herein named as “ERP”) system that best fits their existing business model in the initiation phase of an ERP project. A comprehensive framework for evaluating the three ERP software vendors is proposed. This framework is based on analytic hierarchy process methodology which comprises of criteria sets from product and management aspects respectively.
ERP is an enterprise application where business functions like accounting and logistics are integrated. It is a software architecture that facilitates flowing of information and allows collaboration of information. Hence, enabling visibility across the enterprise by integrating process-to-process, person-to-process and person-to-person. Ultimately, it helps the organization to improve customer response time and enhances cohesive connection with external stakeholders. In a way, achieving sustainable competitive advantage through quicker, better and cost-effective service and management decision process. ERP is positioned as a strategic project that is capable of operating business functions within the organization. Several software selection models are evaluated for selecting the right ERP system. The right software selection model is recommended in this paper to select the right ERP system that fits the organization the most. The proposed ERP selection model involves indentifying criteria in both product and management aspects.
Software vendor selection models – literat ure review
There are numerous selection models of ERP system either qualitative or quantitative. Verville and Halingten (2003) suggested a six-stage model to evaluate ERP software. While Schniderjans and Wilson (1991) recommended the adoption of an analytical tool, Analytic Hierarchy Process (herein named as “AHP”). 2.1.
Six Stage model
According to Verville (2003), the Six Stage model comprises of planning, information searching, selection, evaluation, choice, and negotiations.
Analytic Hierarchy Process (herein named as “AHP”) model The concept of AHP was developed by Thomas Saaty (Saaty, 1986). It is computed based on mathematical algorithm structure of matrices that generate approximate weights with the association of right eigenvector’s ability. AHP is an analytical tool and functions more than just a methodology for choice. Generally, AHP structures complexity, measures on a ratio scale and synthesizes. It involves structuring of criteria into hierarchy of clusters. The individual criterion is assessed with importance rating. The AHP structure comprises of the goals and weighted criteria (evaluation parameters). The importance of each criterion is compensated by assigning a weight to each criterion under the individual branch. The overall score is then computed with the weighted criteria under the individual branch. AHP provides a proven, effective means to deal with complex decision making. Besides, AHP allows clear and efficient identification and presentation of selection criteria via weighting and analysis. Hence, this model helps organization to make critical decision in term of selecting ERP solution.
ISO 9126 model
The identification of the selection criteria of ERP system plays an important role in selecting and qualifying the right ERP system. The price and delivery time frame are both key factors when implementing an ERP project. The initial investment cost of implementing ERP project, the annual maintenance cost and manpower cost are also the potential recurring expense for organization, according to Butlar and Bingi et al. (1999). Realistically, the following evaluation criteria sets shall be considered as key drivers for qualifying the ERP software vendors. Functionality
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