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Analysing the factors affecting the selection of ERP package: a fuzzy AHP approach

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Abstract

Purpose

Contribution of small and medium scale enterprises is significant in development of any country, specifically developing countries like India. Therefore, synchronization and integration of their business processes and functions through effective and efficient information sharing is vital. Hence, enhancing their competence through the adoption of an appropriate Enterprise resource planning (ERP) system is crucial to improve their competitiveness in the competitive scenario. Under this backdrop, this paper analyses pertinent factors for selecting an appropriate ERP system for SMEs.

Design/methodology/approach

This mix-method research involved triangulation design by merging both quantitative and qualitative techniques. Factor Analysis was applied for selection of relevant factors affecting ERP procurement decision. Fuzzy Analytical Hierarchy Process approach, based on triangular fuzzy numbers, was used to rank these factors. Further, sensitivity analysis was performed to ensure the robustness of the FAHP results.

Findings

Cost of deployment was identified as the most significant criteria. On the other hand, ‘Vendor credibility’ was found to be the least significant factor. Criterion ‘User friendliness and Security’ and ‘Need fulfilment’ were ranked as second and third.

Practical implications

ERP vendors can use these findings in developing appropriate marketing mix strategies. SME owners can also make use of these findings by collaborating with other SMEs for buying an ERP.

Originality/value

This study can be seen as first attempt in investigating and ranking various factors affecting ERP adoption decision for SMEs, specifically in Indian context, using FAHP approach.

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Notes

  1. One US Dollar is equal to 73.50 Indian rupees (INR) approximately.

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Authors and Affiliations

  1. Information Management Area, Institute of Management, Nirma University, SG Highway, Gota, Ahmedabad, 382481, India

    Nityesh Bhatt

  2. Operations and Quantitative Management Area, Institute of Management, Nirma University, SG Highway, Gota, Ahmedabad, 382481, India

    Sunita Guru, Shashank Thanki & Gunjan Sood

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Appendix 1: description of constructs

Appendix 1: description of constructs

1. User friendliness of the ERP Package: Ease of learning, adoption, navigation, reporting etc.

2. Information Security offered by the ERP Package: Inherent measures offered by package for protecting data and system from unauthorised access.

3. ERP Package offers solution to your current business problems: Chosen ERP package should include modules/ functionality that has potential to solve current business problems like government reporting, accurate costing, access to real-time data, salesforce management etc.

4. ERP Package has potential to facilitate your future Strategy: Chosen ERP package should include additional functionality that will enable in attainment of organisational future Strategy like R and D, geographical expansion, exports etc.

5. ERP Installation Cost: Total deployment cost incurred by organisation including search cost, hardware, software, database, networking, consulting, training, implementation, customisation etc.

6. ERP maintenance and upgradation Cost: Total cost incurred by organisation after ERP implementation including support, maintenance and upgradation.

7. Reputation of the ERP vendor: In terms of its brand name, market position, financials (profitability, sales), certifications, awards received etc.

8. Capability of Manpower of the ERP vendor: Tangible and Intangible evidences of Manpower quality reflected through qualification, relevant experience, tenure in current organisation, awards, ability to satisfy queries raised etc.

9. Years of Experience of the ERP vendor: Overall IT & ERP related experience of deployment and maintenance.

10. Clients Credentials provided by the ERP vendor: Credential of existing Clients of ERP Vendor like number of clients across industries, contact details, client satisfaction level, evidence of benefits delivered etc.

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Bhatt, N., Guru, S., Thanki, S. et al. Analysing the factors affecting the selection of ERP package: a fuzzy AHP approach. Inf Syst E-Bus Manage 19, 641–682 (2021). https://doi.org/10.1007/s10257-021-00521-8

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