Erp Software Selection Method

Published Date: 02 Nov 2017

ERP software is one of expensive and vital projects for trade investment. Due to the selection criteria of ERP software are numerous and fuzziness, selecting the optimal ERP software is a critical process in the early phase of an ERP project. We propose a fuzzy analytic hierarchy process (FAHP) model, which involves more comprehensive viewpoint for the software quality. In this FAHP model, there are 32 criteria sifted out from product aspect and management aspect. We find out that both time and cost issue are significantly important in both two cases. We also find that these two cases exist diverse priorities between weights of criteria. 

Selecting an adequate enterprise resource planning (ERP) system for the organization is one of the crucial issues in an ERP project. This study proposes a three-phase ERP selection systematic framework which introduces in two principle issues: the McCall software quality model with project management viewpoint and the quantitative analysis of fuzzy analytic hierarchy process (FAHP). 

In this FAHP model, there are 19 criteria sifted out and a real-world practical case is used to illustrate the application of the framework. We find out the 'cost' is significantly important of all factors in this ERP project. We also find 'correctness' is the most important criteria among the software quality factor of ERP software.

2. Introduction

As a global leader with a broad portfolio of leading products, technologies and brands, Caterpillar is forever setting higher standards by maintaining a watchful eye on the ever-changing shift in regional dynamics and responding with new product innovations and manufacturing flexibility. 

Caterpillar's broad portfolio of products, services and technologies fall into three principal lines of business: machinery, engines and financial products. 

Recognizes as the best in its industry, Caterpillar needs the best tool for supporting their business so that it can easily achieve its objectives. Such a tool can only be fulfilled by the best system, which is known as ERP system. 

Because of the complexity of ERP software, the limitation of available resources and the diversity of alternatives, selection of ERP product is time consuming and tedious task (Wei and Wang, 2004). Hence, full participation in the selection process is very important and it should be regarded as a large project (Wognum et al, 2004). 

Besides that, a comprehensively systematic selection policy for ERP system is important to the success of ERP project. This research proposes a systematic framework to select ERP system. 

One is extraction from project management essentials by adopting the McCall software quality model and using the factors of that model to be some of the ERP selection criteria. Another alternative is using fuzzy analytic hierarchy process (FAHP) method to assess the selection of ERP system. Our objective on this research is to determine the model that considers software quality characteristics and solve the multi-criteria decision-making (MCDM) problems and expedites group fuzzy MCDM process. This research combines both FAHP and the ISO 9126 standard so that it can give the best result for Caterpillar's Executive in making their decision.

3. Software Vendor Selection Models - Literature Review

A crucial part of the ERP selection process is the selection of the vendor. Some important factors that should be considered include their concerns and constraints of the organization and its industry, vendors' ability and longevity to meet future needs, understanding of the requirements, their expertise of support and assistance in the implementation process and their system skills and knowledge (Verville and Halingten, 2003).

3.1 ERP Software Selection Method

The number of studies have been analyzed various methods either quantitative or qualitative to optimize, score, rank and MCDM analysis the ERP system or other information technology (IT) system selection problem. While Scott and Kaindl (2000) proposed a conceptual model for ERP package enhancement, Verville and Halingten (2003) also suggested a six-stage model to evaluate ERP software. Some other companies prefer the financial approach to evaluate such systems (Farbey et al., 1992, Han, 2004). However, the quantitative methods were more frequent been used. Different from Buss (1983) who introduced a ranking method in the beginning periods of IT projects, Rao (2000) assessed ERP software package using decision tree. Kumar et al. (2002) implemented basic statistics in a real ERP selection case. Other methods of mathematical optimization methods such as 0-1 binary programming, goal programming and non-linear programming are also broadly been implemented (Lee and Kim, 2000, Santhanam and Kyparisis, 1995, 1996, Talluri, 2000). Dissimilar to the above method, several papers used analytic hierarchy process (AHP) to be the analytical tool (Schniderjans and Wilson, 1991, Wei et al., 2005).

3.2 Selection Criteria of ERP Software

Besides the most important factors of price and time, the vendor's support is also crucial for ERP project selection (Langenwalter, 2000). This factor determines the organizations' potential expense of annual maintenance and human resource cost (Butler, 1999, Bingi et al., 1999). Hence, Wei and Wang (2004) divided three categories to select an ERP system consists of project, software system and vendor factors. Everdingen et al. (2000) explored that supplier and software system are the major criteria containing 10 sub criteria for selecting an ERP system. Even, the priorities of criteria between small-medium sized and large sized company are different (Bernroider and Koch, 2001). Later, Holland and Light (1999) found that the system integration between ERP system and existing information systems is a further technical problem that might entangle the entire ERP project. In reality, selecting a suitable ERP project incorporated multiple factors, and assessment ratings are commonly evaluated in linguistic terms, 'high', 'poor', among others. Later, Wei and Wang (2004) found that a fuzzy MCDM method is very useful in integrating various linguistic evaluation and weights for the selection process.

3.3 Management Criteria

As mentioned above, the selection criteria of ERP system consist of three major criteria: time factors, cost factors and vendor factors. Then, the time factors can be divided into three sub-criteria, cost factors into four and vendor factors can be separated out into four sub-criteria. The total 11 criteria are classified as management criteria and the detail attributes are as follows,

Sub-criteria of vendor factors: service and support, industrial credential, market share and reputation, training solution.

Sub-criteria of cost factors: staff training cost, annual maintenance cost, hardware cost, software cost.

Sub-criteria of time factors: time for BPR and system tuning, time for planning and preparation, time for testing and go-live.

However, only a few researches had incorporated project management viewpoint in selecting ERP system. Despite all of that, the three main parts of the project are time, cost and performance/technology. Among three of them, performance/technology is the most important one (Kerzner, 2001). Badri et al. (2001) manage project criteria comprising cost, benefits, risk, time constraint and performance into IT selection problem; however, they did not define "performance/ technology", the most crucial substance of a project.

3.4 Software Quality Model

Consequently, we propose the McCall software quality factors (McCall et al., 1977) to be component of the performance/technology criteria in ERP project. He recommended a prototype containing 11 criteria. McCall software quality model incorporates a useful classification of factors that affect software quality. Those software quality factors focus on three crucial aspects of a software product: its operational characteristics, ability to undergo change, and adaptability to new environments. Boehm et al. (1978) broaden the attributes of software and involved 19 criteria. Grady and Caswell (1987) specified five major factors comprising 24 characteristics for software quality and known as FURPS model. The difference of those models is mainly on their terminology. The ISO 9126 software quality model consisting of six key attributes is chosen to explain the characteristic and we classify it as product aspect in the model. The detailed attributes are as follows (Bache and Bazzana, 1994).

a) Functionality 

This attribute is defined as the level to which the software functions satisfy implied or stated requirement and can be divided into five sub-characteristics (suitability, accuracy, interoperability, compliance and security). 

b) Reliability 

This attribute is defined as the capability of software to maintain its level of performance under stated conditions for a stated period of time. It can be broken down into three sub-characteristics (maturity, fault tolerance and recoverability). 

c) Usability 

This attribute is defined as the level to which the software is ready for use and can be decomposed into three sub-characteristics (understandability, learn ability and operability).

d) Efficiency 

This attribute is defined as the level to which software able to optimize the use of system resources. It can be divided into two sub-characteristics (efficiency of time behavior and efficiency of resource behavior). 

e) Maintainability 

This attribute is defined as the readiness of which repair maybe made to the software and can be decomposed into four sub-characteristics (analyzability, changeability, stability and testability). 

f) Portability 

This attribute is defined as the ability of software to be transferred from one environment to another. It can be divided into four sub-characteristics (adaptability, install-ability, conformance and replace-ability).

3.5 Fuzzy Analytic Hierarchy Process (FAHP) and Fuzzy Set Theory

Herrera and Herrera-Viedma (2000) stated that human judgments are often imprecise and cannot be formulated with a crisp numerical value. Hence, Fuzzy set theory is formed for solving problems in which description of observations and activities are ambiguous, uncertain and vague. Since Buckley (1985) integrated the fuzzy set theory into the traditional AHP, FAHP were becoming a suitable tool to solve the real-world Multi Criteria Decision Making (MCDM) problems (Buyukozkan et al., 2004, Huang and Wu, 2005). Selecting ERP system is also a fuzzy MCDM problem of which should involve project management viewpoint. Wei and Wang (2004) and Wei et al (2005) have adopted AHP and FAHP respectively for solving ERP system selection problem. However, both of them did not incorporated software quality model to explain the performance factor. Both important issues are incorporated by adopting McCall software quality model and implementing FAHP evaluation method. Hence, the three-phase comprehensive framework (identification, searching and analyzing) eases group fuzzy MCDM process in ERP software selection problems. FAHP had also been used to evaluate public transport system (Hsu, 1999) and selected e-marketplace software (Buyukozkan, 2004). A fuzzy multi criteria group decision-making approach was presented for selecting configuration items of software development (Wang and Lin, 2003).

4. Advantages / Disadvantages of Models

4.1 Software Quality Model

From the above literature review, can be draw the quality characteristics for the four software quality models as follows:

Software Quality

Model

Boehm

McCall

FURPS

ISO 9126

Testability

X

X

 

X

Correctness

 

X

 

 

Efficiency

X

X

X

X

Understandability

X

 

 

X

Reliability

X

X

X

X

Flexibility

 

X

X

 

Functionality

 

 

X

X

Human Engineering

X

 

 

 

Integrity

 

X

 

X

Interoperability

 

X

 

X

Maturity

 

 

 

 

Mainability

X

X

X

X

Changeability

X

 

 

 

Portability

X

X

 

X

Reusability

 

X

 

 

Usability

 

X

X

X

Software Quality Model Advantages:

Though having some advantages (in the objective measurability), quality models actually reduce the concept of quality to a few relatively simple and static attributes.

The Advantages of McCall model are:

This model creates relationship between quality characteristics and metrics, even though not all metrics are objective. 

Disadvantages of this model, software product's functionality was not considered directly.

Boehm’s model advantages

It outlines a hierarchical structure of characteristics as McCall's does, each of which contributes to total quality. 

The other advantage is both of McCall and Boehm's concepts include users needs. 

Disadvantages, it also includes the hardware yield characteristics not found in McCall model. 

No suggestion about quality characteristics measurement.

ï‚· One disadvantage of the FURPS model is that it cannot handle software product's portability.

ï‚· One advantages of the ISO 9126 model is that it identifies the internal and external quality characteristics of a software product.

However, its disadvantage is that it cannot show very clearly how those certain quality aspects can be measured.

4.2 Analytical Hierarchy Procedure (AHP)

The advantages of AHP are that it

Simple, intuitive, and yet has mathematical rigour.

User friendly

Encourages a process of learning, debate and revision.

Can facilitate participation.

Accommodates multiple criteria.

Integrates subjective judgments with numerical data.

Has commercially developed support such as expert choice

However the disadvantages are:

The criteria chosen mostly depend on the researches but the weights assigned are personal points of view; any other person could have reached a totally different result by assigning different weights to criteria & sub-criteria. Although the method is the same, results may change

The length of the process, which increases with the number of levels and number of pair-wise decisions

Different size of the company can produce different result.

The expense of the commercial software that makes the approach practical.

5. Recommendation

for weighting the developed value, criteria and sub-criteria in ERP software selection. 

Based on the above description and analysis, we found the ISO 9126 is the most desirable model among all the quality models in this paper, regardless of some limitations. 

This model considers the understandability and functionality of the software, of which cannot be explained by McCall's model. Those issues are quite important relating to the ERP software selection as they also related to the management criteria of time and cost factors. However, how those certain quality aspects can be measured by applying one of the evaluation techniques such as AHP (Analysis Hierarchy Process). 

Ranking, scoring and AHP methods do not apply to problems having resource feasibility, optimization requirements or project interdependence property constraints. In spite of this limitation, practitioners have used the AHP method with real problems, because of its simplicity and user-friendliness. The user-friendliness of the AHP method allows complex problems to be structured in the form of a hierarchy, where each factor and alternative can be identified and evaluated with respect to other related factors. 

AHP enables the decision-makers to structure a complex problem in the form of a simple hierarchy and to evaluate a large number of quantitative and qualitative factors in a systematic manner, under conflicting multiple criteria. 

AHP technique has been chosen as the most appropriate technique

In addition, Fuzzy logic has been chosen because its ability to mitigate the effects of ambiguous or vague descriptions applied by the construction organizations. The use of fuzzy sets provides a very powerful tool for extending the capability of binary logic in ways that enable a much better representation of this knowledge. Both of the techniques are combined together into FAHP model.

6. Conclusion

This paper proposes a systematic MCDM model to select an appropriate ERP system. This framework combines ERP software quality factors and FAHP, which offers decision-makers a more comprehensive viewpoint and also proffers decision-makers an effective and efficiency procedure. 

The procedure introduces ISO 9126 standard to interpret the quality characteristics of ERP software, hence, a more specialized overall concept is conducted for ERP selection problem. 

The proposed framework contributes two major advantages:

Combining the McCall and ISO 9126 software quality models to interpret the performance term of project management, a more complete and flexible overall framework is conducted for ERP selection problem.

Adopting FAHP method is more practical to solve the real-world MCDM problems. A successful case is applied to prove our proposed model is practical for use.