2

5
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International Conference on Enterprise Systems, Accounting and Logistics (5
th
ICESAL 08)
7-8 July 2008, Crete Island, Greece

A Survey on ERP Package Selection and Evaluation Methods
and Frameworks
Leila Saroukhani, Arash Niknafs, Shahab Bayati and Zahra Saleki
Department of Information Technology, Tarbiat Modares University, Tehran, Iran
saroukhani@modares.ac.ir, niknafs@modares.ac.ir, shbayati@yahoo.com, saleki@modares.ac.ir
Abstract
Selecting the right ERP package for an organization is an important and critical issue which
requires a thorough and careful evaluation of all possible choices. The difficulty and complexity
of the factors influencing this evaluation process have made many managers and decision
makers to look for a reliable and automated method of decision making, so that the accuracy,
speed and comprehensiveness that they were looking for could be achieved.
In this paper we are trying to review the methods that outburst after these needs and there will
be some comparison between the methods. We will also talk about different dimensions of the
selection and evaluation methods and after counting some advantage and disadvantages of
some methods we provide some proposals and future works as new horizons of solution.
Keywords: ERP; project selection; MCDA.
1. Introduction
Many fields of industry are experiencing some kind of rapid changes which are mainly
caused by the rapidly growing and changing technology (Dey, 2005). However, these
changes in information and communication technologies have contributed too much of
their worldwide success. In this rapidly changing environment success come after rapid
and careful enough reactions. One of these reactions is selecting strategic project and
software packages for an organization to obtain and sustain competitive advantage in
comparison with its rivals within and outside its industry. In addition to this, the projects
that a manager evaluates and finds worth funding should contribute to the organizations
vision. Thats why selection and evaluation of projects especially strategic projects like
ERP projects- become more important and critical.
The decision to fund or not to fund a project becomes more vital, when its related costs
(such as time, money and other resources) are high and its effects (after
implementation) on organization are intense.
Implementing ERP projects in an organization requires the consideration of different
dimensions such as cultural, change management and etc.
ISBN CD-ROM PROCEEDINGS: 978-960-287-105-8

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ERP (Enterprise resource planning) is the term for an information integrating system in
an organization. And this information can range from financial, accounting, human
resource information to even customer information (Davenport, 1999). ERP systems
have recently been known as a strategic weapon for organizations which are dependent
on and using information technology to a huge extend (Yang et al., 2007).
Although there has been done a lot of work on ERP systems with vendors such as SAP,
Oracle, PeopleSoft and other vendors there are still industries that lack an especially
designed ERP (Yang et al., 2007). When companies from such industries decide to
choose a package they face a lot of choices which are not the best and are not
developed by the best vendors and they hardly contain best practices. So the selection
of a good choice becomes more critical and time taking. That is the time when
managers or decision makers get to the point that they should apply a full proof method
that takes every single issue into account and in a short time helps them with the
process of evaluation and selection.
In the related literature there are some papers which discuss the formation of a portfolio
of projects from a list of available solutions. But here we are talking about the
frameworks used to help decision maker choose among a large number of possible
choices while considering a large numbers of factors. Most of such frameworks are
about R&D and ERP projects evaluation and selection.
As discussed in (Wei et al., 2005) due to the changing environment and especial issues
with ERP systems, the process of evaluating ERP packages is difficult. Implementing
such projects (like ERP systems, etc.) is some thing more than installing an application.
Every choice will affect the whole organizations shape and structure in a different way
(Kumar et al., 2002). The proposed frameworks try to combine the experts knowledge
with the accuracy and power of their algorithms to overcome such challenges with
project evaluation processes.
Before we go to section 2 we clarify our description of main concepts (ERP and MCDA)
in this paper as they are indicated in different related research papers.
1.1. ERP (Enterprise Resource Planning)
There are many definitions for ERP or Enterprise Resource Planning like the one we
point in introduction. The ERP system is an increasingly popular management tool. This
is confirmed by the importance of research publication in management and business
journals (Botta-Genoulaz et al.,2005) also we can say The ERP system was developed
and derived from the previous MRP (Materials Requirement Planning) system and
MRPII (Manufacturing Resource Planning) system (Yang et al.,2007).
Nowadays, ERPs attempts to integrate all departments and functions across a
company onto a single computer system that can serve all those different departments
particular needs (Koch et al., 1999). It is also said it is an information system that
manages and integrates all areas of a business like produce, plan, buy, manufacture,
sell, distribute accounting and services (Scalle and Cotteleer, 1999).
The key characteristics of ERP systems are summarized below (Chand et al. 2005).
1. ERP systems are off-the-shelf pre-written software with sufficient flexibility to integrate
most of the business processes of an enterprise.

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2. ERP systems are at least an order larger than any traditional business application
software. They are large in terms of function point measure. They are large in terms of
business functionality. They are large in terms of the data items in the database. They
are large in terms of the operational and management reports that can be generated.
3. ERP systems are very complex. Besides the usual correlation between size and
complexity, there is an inherent data structures complexity in ERP systems because
ERP modules do not share data bypassing it from one module to another module but
makes it available to different modules via common data structures.
4. ERP systems are built on generic business rules and procedures. Thus, each
implementation requires tailoring and customizing the modules based on the business
practices of the organization. This often entails reengineering many of the current
business processes.
5. The organizational reach of ERP systems is wide, and therefore an ERP
implementation requires dealing with a very large portion of the business operations of
the organization.
6. ERP systems are costly to buy and more expensive to implement in an organization.
One information planning decision involves project selection from among a portfolio of
options. This involves multiple steps, including selection and weighing of alternatives.
Choice and weighing on criteria become crucial in the selection of the projects to
pursue. A survey conducted by the authors found that organizations with an expectation
of future IS importance rely heavily on organizational goals, management support and
environmental factors. Organizations with low strategic expectations of are rely more
heavily on management support, political considerations, and risk. The results allow
managers to position selection criteria according to their strategic use of information
technology (J iang and Klein, 1999).
There are four classes of organization that have very different needs for IS and
technology: Strategic organization, Turnaround organization, Factory Organization and
support organization. So the IS professionals must be able to make more informed
decisions on the IS mission and resource allocation for competing IS projects and pay
more attention to these six subcategories of IS evaluation criteria : financial ,
organizational, competing, environment, technical, risk, and management(J iang and
Klein, 1999).
1.2. Multi criteria evaluation (decision) analysis
A number of methods have been applied to ERP or other information system (IS)
selection including scoring, ranking, mathematical optimization, and multi-criteria
decision analysis. The scoring (Lucas and Moore, 1976) method is intuitive, but too
simple to truly reflect opinions of the decision makers. Buss (1983) proposed a ranking
approach to compare computer projects. This method also has the same limitation with
scoring method. Mathematical optimization such as goal programming, 01
programming, and nonlinear programming have been applied to resource optimization
for IS selection. Santhanam and Kyparisis (1995, 1996) proposed a nonlinear
programming model in the IS selection process. Lee and Kim (2000) combined
Santhanam and Kyparisis model with analytic network process (ANP) and a 01 goal-

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programming model to select an IS project. Badri et al. (2001) presented a 01 goal
programming model to select an IS project considering multiple criteria including
benefits, hardware, software and other costs, risk factors, preferences of decision
makers and users, completion time, and training time constraints. However, the
applicability of these methods is often weakened by sophisticated mathematic models or
limited attributes to carry out in a real-world ERP system selection decision, especially
when some attributes are not readily quantifiable, and not too easy for managers to
understand (wei et.al ,2005).
Select a portfolio of projects is a process that includes many sequence steps and it is
not only summarizes in evaluating, ranking and optimization of them (ghasemzade,
Archer, 2000), but also not a new method that mixed with fuzzy logic could solve many
of these problems. This method that is named AHP
3
was introduced by Saaty at 1980.
After a while, a similar method with more and better advantages was created
(visualdecision, 2008) that could be a new way for research in the future. This method,
first presented by J .P.Brans at 1982, is now its very useful for recommended systems.
All the methods discussed above investigate and compare projects from different areas
like AHP, so they have multi-objective methods. These methods can be designed by
Genetic Algorithm, Neural Network or fuzzy logic that use for solving multi-objective
problems as revolutionary algorithm in (Coelo Coelo et al, 2007) book.
The other model, that directly used for selection ERP Package, is Santhanam and
Kyparisis (1995, 1996) model to optimize resource allocation allowing for the interaction
of factors (risk , goals, financial advantages, available resources, interdependencies
between other information systems that have existed in organization, dependency of
resources and technical dependencies that play important roles in decision making for
selecting an information system); illustrated that optimize previous model.
2. Literature review
In this section we will investigate the literature review in relationship with the topic of
paper that the results will be illustrate in conclusion section.
2.1. General view approaches
Some approaches are applied to the process of buying and selecting a package and
present some algorithm and factor for it.
Model of the ERP acquisition process (MERPAP)
Among general models, Verville and Halingten in 2003 applied a six-stage model for
buying process of ERP software that is known as MERPAP (Model of the ERP
Acquisition process). This model includes six steps as below:
1- Planning process: one of the major findings of this study is that the MERPAP,
unlike the process (es) used for other types of organizational buying, includes a
planning process during which the acquisition teams addressed as many issues
as possible and planned the various activities and phases (processes) of the

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MERPAP. The planning process of the MERPAP (MERPAP-P) contains seven
categories. 1- Acquisition team formation: this first element played an important
role in the success of each of the acquisition projects. 2- Acquisition strategies:
The strategies that each team developed for the ERP acquisition helped reduce
some of the uncertainty associated with this process, 3- Requirements definition,
4- Establish selection/choice and evaluation criteria, 5- Acquisition issues, 6-
2- sists of two principal elements: information
3- ate
4- E)
5- C), as a process, followed as a natural result
6-
iness
process that was continuous throughout most of the MERPAP.
e other. Shields recommends them for selecting
dy selection.
en developed. The final decision is determined by the highest total
Marketplace analysis, 7- Deliverables
Information search process: It con
screening and information sources.
Selection process: It consists of only two principal elements: Evalu
RFI/RFP/RFQ Responses and Create Short list of Vendors/Technologies.
Evaluation process: The evaluation process of the MERPAP (MERPAP-
consists of three distinct areas of evaluation: vendor, functional, and technical.
Choice process: Choice (MERPAP-
of the abovementioned processes.
Negotiations process: the negotiation process (MERPAP-N) of the MERPAP is
divided into two types of negotiations, business and legal, and it is the bus
negotiations
Shields approach
In (shields, 2001) approach, a suitable package have the situation below:
1-Fitness , 2- functionality, 3- flexibility with environmental change, 4- can be extended
to work with other departments in organization, 5- good support services during
implementation process,6- Hosting capabilities, 7- implement completely with after
buying and support services
These seven points are known as general characteristics of a package. Also
buyer(producer) should have some characteristics that Shields illustrated in his paper,
but we want to get familiar with factors and methods depending on packages,
additionally he introduced a three based approach which includes: detailed requirement,
key requirement and proof of concept for selecting a package or vendor. Now we should
decide which approach is better than th
complex, normal and spee
Wei and Wang approach
(Wei & Wang,2004) proposed a comprehensive framework for selecting an ERP project
that combines data obtained from professional studies with that surveyed from
interviews with vendors (external professional reports and subjective data obtained from
internal interviews with vendors). A hierarchical attribute structure including project,
software, and vendor factors has been provided for evaluating ERP projects. In their
work, fuzzy set theory is used to aggregate the linguistic evaluation descriptions and
weights. An integration model that uses the fuzzy average method and fuzzy integral
ranking has be
integral value.

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Karsak and Ozogul approach
(Karsak & Ozogul, 2007) developed a decision framework for ERP software selection
based on quality function deployment (QFD), fuzzy linear regression and zeroone goal
programming. Their proposed framework enables both company demands and ERP
system characteristics to be considered, and provides the means for incorporating not
only the relationships between company demands and ERP system characteristics but
ed to determine the ERP system
alternative that minimizes the weighted sum of deviations from the maximum achievable
ak & Ozogul, 2007).
y and the relationships between them are identified. Their proposal also
offers some advantages in comparison with the IEEE Std 1062/1998, as indicated in
he literature that can help us in decision making process or any person
e business goals and strategies of an enterprise. This method emphasizes on
aspects. For example, Schniederjans and Wilson (1991) utilized the AHP method to
also the interactions between ERP system characteristics through adopting the QFD
principles.
The developed framework integrates ERP characteristics obtained from vendors in the
market and the list of customer requirements by taking into account the company profile
and strategic selection criteria. Using QFD provides the means for incorporating the
relationships between user demands and software characteristics and also the
relationships between software characteristics disregarding the unrealistic preferential
independence assumption frequently encountered in earlier IS selection studies using
MCDM techniques (Karsak & Ozogul, 2007). The target values for ERP characteristics
and the maximum achievable values for customer requirements are obtained using
fuzzy linear regression. The ZOGP model is employ
values for company needs (Kars
Bueno and Salmeron approach
(Bueno & Salmeron, 2008) applied a Fuzzy Cognitive Map based approach capable of
offering a definitively organized and structural outline in the acquisition of an ERP tool.
Also, this proposed model offers a selection model where the more relevant criteria,
their intensit
their paper.
2.2. Evaluating tools
When the organizational process of selecting package is applied, we should mix these
factors to make a final decision. In this section we will illustrate two approaches which
we presented in t
who does that. The first approach is a mathematical tool and the other one is a
managerial one.
In (Wei et al,2005) presents a comprehensive framework for selecting a suitable ERP
system. The framework can systematically construct the objectives of ERP selection to
support th
consistency between objectives of the framework, which is guided by the company
strategy.
As we mentioned before The AHP method, introduced by Saaty (1980), determines how
to determine the priority of a set of alternatives and the relative importance of attributes
in a multiple criteria decision-making problem, and has been widely discussed in various

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determine the relative weights of attributes and applied these weights to a goal
programming model for IS selection. But the selection procedures of an ERP system
based on Wei method are described below:
Step1. Form a project team and collect all possible information about ERP vendors and
ctives to develop the fundamental-objective
asking specific questions, which are formulated
d.
Fig. 1 shows a flowchart for the ERP selection process as a complete framework.
Monitoring Balanced Scorecard
f the four BSC ERP implementation and ERP
operational use are shown in Table 1.
Selection with BOCR approach
bout
systems.
Step2. Identify the ERP system characteristics.
Step3. Construct a structure of obje
hierarchy and means-objective network.
Step4. Extract the attributes for evaluating ERP systems from the structure of objectives.
Step5. Filter out unqualified vendors by
according to the system requirements.
Step6. Evaluate the ERP systems using the AHP metho
Step7. Discuss the results and make the final decision.
(Chand et al, 2005) use balanced scorecard (BSC) to evaluate ERP packages. The
main ability of this method is when non-functional measures about customers
satisfaction, internal processes and ability to innovate and learn are combined with
financial measures, they assure future financial results. The application of balanced
scorecard has been examined in the context of Information Technology (IT) and
information systems and four balanced scorecard dimensions of customer, finance,
internal business processes and learning and growth as user-oriented are
operationalized, although BSC was conceptualized as an approach for strategic
management of a firm in which they partition the ERP strategic management processes
into a management of ERP implementation and management of operational use of ERP
software and they propose a separate balanced scorecard for each part, however, there
is an important point and it is, if balanced scorecard dimensions do not connect to the
business goals and organizational strategy this approach will direct us to fail, but if they
align with each other they will make value for organization. They key question for
identification of measures in each o
(Liung and Li, 2007) provide another approach for project selection, Analytic Network
Process (ANP) is used to make decisions with regard to benefits (B), opportunities (O),
costs (C) and risks (R). Then this decision method is examined by a case study of MES
project selection in Chinese undershirt manufacturer although, this case is a
enterprise information system project selection but it can be used in broader areas.
In many researches and studies benefits, opportunities, costs and risks have been
discussed. Financial approaches such as return on investment (ROI), net present value
(NPV) and internal rate of return (IRR) have two limitations: 1. they only consider
tangible or monetary effects and skip intangible ones. 2. Because the calculation of ROI

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or NPV or IRR is relatively complex and it is completed mainly by professional financial
personnel. The decaled approach is directed to solve these problems. This method
involves these steps: 1. Perform enterprise diagnosis. 2. Compare with exemplars 3.
Verify problems needed to be overcome and basic function required. 4. Construct the
BOCR decision model. 5. Make pair comparisons. 6. Calculate outcomes and make
nalysis.
Table 1. Question for ERP performance

a

ERP implementation ERP operation
Financial t of
RP implementation?
l?
What is the detailed cos
E

What is the financial input
necessary for achieving
targeted performance leve

Customer
he ertain level
Internal process prove
usiness
rocesses?

nt in
by
Innovation and learning
ntegrate future
hanges?

r future
ustomer needs?

Does the ERP software
efficiently support t
individual needs?

Does ERP software im
the internal b
What benefits derives the
company from a c
of performance?

Are internal processes
effective and efficie
assessing level of
performance determined
p
customer perspective?

Does ERP system have
enough potential fo
Is ERP software flexible
enough to i
c c
Project selection: Process Analysis
and
odification; 3. Project and proposal presentation; 4. Project selection for funding.

2.3. Performance prediction systems
Companies involved in rapidly changing market are interested in value collaborative
efforts aimed at realization of shared benefits. In (Daniel et al, 2003) the project
evaluation process employed by the most successful industries were discussed
university research center sponsored by national science foundation. The whole paper
focused ion the process management issues involved in the formulation and evaluation
of research proposals, structural advantages and liabilities associated with the process.
These processes are strategically significance, because they define the organization
research agenda, focus resource allocations by linking capabilities and commitments
and from the performance assessment process. There are four major components in the
project evaluation process: 1. proposal generation; 2. Proposal refinement
m
There exist many prediction systems that were discussed in (Stensrud, 2001). Tools for
prediction of functionality of ERP packages importance and value of these systems are

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divided into three ways and they can help us in making decision: 1. their ability to ERP
projects; 2. their added value to human user beyond making a prediction; 3. their
prediction systems are: CBR
1
, ANGEL, ACE, ESTOR, neural networks,
differences are based on users requirements, goals and ERP
in criteria according to literature review. 2. Developing a
pilot test using 30 key users.
2.4. Neural Networks and SCM
3
SCM and ERP and
mentioned that integration is necessary for strategic management.
2.5. Localization and cultural consideration

competence and correctness.
The performance prediction is divided into two main categories parametric and non
parametric. They have been discussed in (Stensrud, 2001). Parametric prediction
systems provide a mathematical relation between response variables and predictor
variables. Some useful parametric prediction systems that can be used for ERP projects
are linear regression models, COCOMO 2.0, COCOTS, REVIC, and Checkpoints. Some
non-functional
CART, OSR
2
.
A new approach for researches in this field was introduced by (Wu et al, 2007). In that
paper they introduce a method for ERP package selection based on computing
distances between ERP package and firms requirements. This method helps
organization to the location of difference and finds the importance in measuring risks in
a simple way. These
package capabilities.
The basic challenges in ERP package implementation is in the relation between IT and
organization society (Wu et al, 2007). Estimation of ERP success in the view of key
users is another way that can helps decision makers to predict functionality of packages
in organizations. ERP systems are complex and expensive. Initial analysis of ERP
systems characteristics are important for the environment were explored and some
users satisfaction instrument were selected for examination using rigorous and
systematic interview techniques and iterative developing method. In this method a
questionnaire was developed and its validity and reliability was proved. This study has
two phases: 1. preparing ma
In addition to the prediction role of neural networks in the last section, we have found a
paper using neural networks for analyzing packages from SCM perspective. (Chang et
al, 2007) introduce a neural networks evaluation method for ERP performance from
SCM perspective. This model can help firms to evaluate their cooperators; the required
data were collected from a textile company in Taiwan. The learning theory is based on
strategic thrust theory and uses back propagation network as an evaluation tool. The
back propagation uses as a tool to reach organization personnel and consultant
knowledge, although (Tam et al, 2002) focused on integration of

1
Case Based Reasoning
2
Optimized Set Reduction
3
Supply Chain Management

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An important thing that should be mentioned in selection and evaluation of ERP
package, vendors and also in ERP projects implementation is the cultural and regional
role which may conduct to two different results in two different countries or
organizational culture. (Yang et al, 2007) expands this topic, in this paper condition of
Taiwan and Canada was studied and analyzed. In a report that is about 10 companies in
Canada. the three major factors that influence selecting ERP package and vendors were
discussed. Another research implemented through 20 Canadian companies shows three
important factors including: adequate information systems, accessibility of solution four
the business, integration of parallel. Another key factor, important only in Asian countries
k of professional and then shows some solutions for solving
ese problems including selecting right package, selecting good team, BPR, education
and outsourcing, ASP
4
.

is culture, Differences between the culture of ERP package developers and Asian
company shows the necessity of localization.
In implementing ERP packages three main factors play important role: human resource,
technology and process. The implementation of ERP packages in developing countries
is complex because of high cost, long time, business process reengineering (BPR).
(Yussef et al, 2006) have introduced some problems of implementing ERP projects in
China including support of senior manager, high costs and long time. Different culture
technical complexity, lac
th

4
Application Server provider

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Fig 1. Comprehensive ERP system selection framework

In small firms major factors are financial, human resource and technical factors. Based
on (Yang et al, 2007) research in Taiwan main problems in implementing ERP systems
are complexion of work processes. Seven key factors that are important for
implementing ERP are system coding, BPR, ERP implementation priorities in the case
of tasks, localization, cooperators, consultant, performance and contactors, also this
problems can be seen in vendors and IT personnel and education.
An important note is that within all evaluation criteria each factor that is related to
education of end users is the most important one (Harmon, 2003) told that based on a
research data that was gathered from Gartner Groups (Harmon, 2003) argued that
implementation of an ERP is a BPR problem so educating users is an important factor to
select packages and vendors.


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3. Conclusion and Future Work
Evaluating and selecting and ERP package which fits the organizations needs and also
satisfies different criteria is a complicated process. It is also one of the most important
and strategic decision making processes that a manager may go through during his/her
management period. It seems that the ERP systems -as they are nowadays- have not
been produced before. They are more popular and more vendors are offering such
systems in their new integrated form. Due to the recent growth of ERP systems
production, the evaluation and selection frameworks emerged. Thats why the literature
about the package evaluation and selection is not as old as the dawn of ERP-like
systems.
As we mentioned before, performance prediction is a category of evaluation methods.
There are two types of performance prediction methods which a comparison between
these two is illustrated as following:

Table 2. A comparison between parametric and nonparametric methods

Parametric Non- parametric
Relationship between the
predictor variables and
response variable,
e.g. number of interfaces
and the effort to produce
them
Make a priori assumptions
(express the relationship in
mathematical form )
e.g. the expected effort
increases monotonically
with size
Make no a priori
assumptions
(they approximate arbitrary
functions)
e.g. makes no such
assumption

Overfitting

---
Arbitrary function
approximators suffer from
overfitting problem s which
are related to the problem
of filtering stochastic noise

Trustworthy More confidence Less confidence

Added value
Help user to understand the
data by providing an
abstraction, or reduction, of
the data set.
i.e. aid in confirming or
rejecting hypotheses
regarding returns to scale.
Assist the user in
understanding the data by
drilling down into the
individual data points,
i.e. assisting in exploratory
data analysis.

Applying the lesson learnt and experts knowledge to the evaluation and selection
processes is what every body desires for. Although in (Chang et al., 2007) there has
been a solution to such an issue but its clear that still there can be done a lot more with
neural networks and genetic algorithm learning methods. These methods facilitate the

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use of lesson learnt and knowledge in decision processes. Some of their contributions to
this issue are discussed in (Menhaj, 2003).
If we look at the problem of selecting a package as a multi criteria decision making then
we may consider AHP and PROMETHEE as two of the most common solutions to this
problem. There are some works that use AHP as the basis of their proposed framework.
(Macharis et al., 2004) compares the AHP and PROMETHEE and suggests that in many
cases -as in this case- the PROMETHEE method outperforms the AHP method. So the
application of PROMETHEE method can be considerable future work.
As we saw BSC was used as an evaluating tool. Where BSC is used the dashboard
idea comes to mind. Dashboard is another tool for control management in information
technology. It provides little details but it can be used like BSC in decision support
systems to design systems that can help high level managers infer and decide easily
and fast.
The amount of literature about cultural and regional issues indicates that the soft side of
the environment in which the decision is being made is an important issue. It suggests
that not every framework is supposed to work properly in an especial culture and
country. It also indicates that not only in countries but also in different organizations with
different cultures we should be aware of system implementation methods and consider
that a previous successful implementation of a framework in an organization does not
mean that it will be successful in our organization too.
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