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COIS 12073 Enterprise Systems Proof Reading Services
Enterprise Resource Planning (ERP) is a business process to help the organization in management of resources and activities effectively to attain competitive benefits. Software is used to manage the ERP process. The report will discuss the key activities those are followed in ERP software and vendor selection process. The report will discuss the activities like user requirement consideration, cost estimation, request for information, analysis and vendor contracts. The report will also identify the key issues those may influence the selection process. Various recommendations and solutions will be discussed for the issues to attain the effective results in ERP software selection process.
ERP Software and Vendor Selection Process
ERP software are business process management tool those helps the organizations to use the integrated applications for the business performance and productivity along with automation of services, technologies and human resources effectively. The selection and implementation of the ERP systems is complex due to the constraints of cost and required functionality. The functional requirements and strategies behind the long-term objectives determine the selection of ERP software and vendors for business effectiveness. The process of ERP software ad vendor selection goes through the following activities:
User requirements:The major requirement of the business is to enhance the performance and to generate the competitive benefits for market trends. The ERP software selection has to identify the user requirements in functionality, human resource management, finance control and supply chain system. The user requirements for the strategic support and to meet the future trends and developments in business need to be addressed in selection process (Alpers et.al, 2014). The selection of ERP and vendor should be aligned to business requirements and processes so that high acceptability can be delivered to users.
Cost estimation: ERP software development and implementation cost should be evaluated carefully to deliver the effective solution within the cost constraint. Top management of the organizations need to compare the cost of software for their features, technically advancements and future supports with the requirements of business in present and future context. The evaluation helps to identify the internal capabilities in finance and requirements in business process. Prior to dive into implementation process, it is essential to identify the maximum cost the organization can invest for ERP software (Motiwalla and Thompson, 2012).
Requesting information: By consideration of budget limits, the organization can request the vendors to provide the details of their ERP software products. Technical and functions documents can be collected for various vendors (Bradford, 2015). For practical information, the organization can refer the clients of vendors already using the ERP product. The information about the performance and reliability of ERP software can be gathered from other organizations so that an effective decision can be made.
Request for bid:The analysis of the information collected from the multiple sources is followed by the bid of the ERP software and vendor for the customers. Only the vendors are short listed those provides the required information on their products, implementation, resource requirements and cost. The submitted information in bid is evaluated and unqualified vendors are discarded. At the next phase of process, the selected vendor is also reviewed for the customer demands and internal operational requirements. Final choice of ERP software is furnished with the negotiation and execution of the contract with parties.
Vendor analysis: technical team of the organization analyses the vendor selected in request for bid activity. Key points of analysis are related to identification of technical features, functionality support and cost in implementation. This activity takes requires time and proper planning to reach an effective decision (Kazemi et.al, 2014). Future support of the vendor, present inclusion of technological advancements and integration of software in existing business process is also considered for the analysis process. ERP software selection has significant impact of cost and technical functions required. Price negotiation and reviews of offering from vendors are also done in this phase.
Contract management and license agreement:this is termed as the finalization of selection process as the program manager of the organization critically analysis the terms and conditions for the use of ERP software. The vendor’s finance and time requirements to complete the implementation of ERP software. The future activities for the maintenance and support along with consideration of issues in software are also included in the contract to avoid the conflicts. The contract management ensures that the vendor will complete all the user requirements for functions and cost in software. It is also the legal boundaries for both, the organization and vendor, to work for each other. At other side, the licensing of the software ensure that the organization achieve a valid and effective system to meet the business requirements (Khan and Faisal, 2015). The license agreement specifies the user manuals, system specifications, update of ERP software. The further benefits through the software update and modification will be based on the license agreement with vendor.
Major issues in ERP software and vendor selection process
Due to availability of multiple vendors and rapid changes in technology, it is quite difficult to reach a decision effectively for ERP software. At other side, internal weakness of management and business operations become the issues for the ERP software and vendor selection. The following are the key problems those may influence the selection process for its effectiveness:
Weaknesses in the planning among the stakeholders can influence the overall selection process for the cost and time. The conflict in the approaches and policies to determine the effectiveness of the ERP software can generate the ambiguous results for ERP selection. It is required to have strong bonding among stakeholders for the constraints and requirements of the business so that together they can reach an effective decision (Chou et.al, 2014). Clarification of things from the management helps to lead the team to plan the process for ERP software.
The poor contribution of employees in the ERP software selection process may be due to changes in work approaches and addition of new technologies. The internal resources of the organization resist against the changes when the gap of understanding with new ERP selection process is high than the existing approach of working. Thus, it is an issue for the selection process to achieve the adoptability of the process among all the important stakeholders inside the organization.
Support for legacy applications
It is possible that the organization may want the existing software modules in the newer ERP software. The support for the legacy applications in ERP software becomes the issue for the development team. It is difficult to achieve the performance and reliability when modules are externally linked to each other for dependent working. The organization’s stickiness for legacy support depends on the cost and values associated with older software (Ratkevicius et.al, 2012). Therefore, the proper identification of software and hardware for the business functionality is required to integrate the legacy support. Lack of vendor side supporting documents for the legacy application integration becomes the issues in selection process.
Poor understanding with key functions and features
Go thorough planning and analysis of features and functions to attain in ERP software leads the improper selection of vendor and software. Functional requirements and benefits should be made clear to identify within ERP software so that the effective investment can be made. Misunderstanding and perception based decision in selection process lead the issue of wrong selection so that organization fails to attain the benefits and requirements at finalization of ERP software (May et.al, 2013). Organizations can consult the technical staff and make evidence based documents to prove the selection of ERP software.
Lack of maintenance strategies
The performance and productivity of the software can be preserved with regular maintenance for the new functions and features. The ignorance of maintenance strategies leads to replace the existing software which is costly and time consuming. The clarification of maintenance activities by the vendor should be examined carefully in contracts and license to meet the best performance. Other additional activities like update of operating system, software and core framework is required to prevent the complex issue of entire software replacement in business. It is required to reduce the cost and efforts on employee re-training, streamline productivity management and smooth business operations.
The modularization of the ERP software helps to attain the requirements of the business. Multiple applications may be used for the business processing. For example, the organization can use different systems for transaction processing and decision supporting so that it is required to integrate the multiple applications on a single framework to achieve the efficiency and productivity (Bradford, 2015). ERP software selection process should follow the integration requirements for the third party applications. The software must be capable to make advantages with other applications to meet the overall functionality. Addition to it, ERP software should accept the results and reports from the third party plug-ins and applications and should be capable to produce the results those also can be used with them.
Inappropriate number of license
The organization needs to purchase the license according to users assigned to work on ERP software. The issues appear when the vendor denies for pay back of additional cost on return of licenses. Therefore, proper planning should be on the license numbers and quantities to avoid the conflicting situations.
Recommendation to manage issues
ERP software selection and implementation process can consider on key point of failures by introducing the right approach to meet the objectives. The issues are appearing due to lack on planning, execution and analysis so that the following approaches are recommended to resolve the issues:
Poor planning issue can be resolved with the help of internal audit of stakeholders so that their perceptions, participations and general suggestions can be used to reach the decision making. The internal events and operations can be restructured so that important employees and management team members can attain the meetings for proper planning. It should be ensured to consult with every important aspect of organization to generate the acceptable plan for ERP software and vendor selection (Schniederjans and Yadav, 2013). Proper identification of users in business on ERP software can eliminate the issue of licence numbers.
Change management issue needs the engagement of vendor to train and develop the employees of the organization so that they can use the system effectively. The users in organization should be promoted to accept the changes as an opportunity to enhance their productivity. The clear convey of objectives behind the changes will encourage the employees in change management. Modification in existing work approaches and software interface should be re-communicated with employees to assist them.
In order to get solution over the issue of misunderstanding or lack of knowledge, the top management has to prefer the skilled employees those have experience in such type of activities. The organization also can enforce the creation of master list on functions and features of the every possible solution so that critical analysis can be done to reach a decision (Hung et.al, 2012). It is required to support the selection with evidence so that all the stakeholders can be made satisfied with decision.
The organization can analyze the requirement of the legacy applications for the business processing with new ERP software. If they can be replaced effectively with new software selection then there is no need to keep them continued. However, if they are costly and more familiar to employees then applications can be integrated in new ERP system to reduce the cost on training and development for new interface (Alpers et.al, 2014). It is also recommended to standardize the format of outcome from ERP software so that data can be adapted with more applications in business processing.
The openness of the ERP software and vendor code is recommended to make the changes in modules. It is required to enhance the integration of third party applications and plug-ins. For example, the organization can use the different transaction processing system in business rather than the in-built transaction system in ERP but it requires that the module offer full technical framework to integrate the other applications.
The report has been concluded that the selection of ERP software and vendors is required to meet the present and upcoming requirements of the organization to achieve the performance, productivity and reliability. The report has been discussed the process of ERP software and vendor selection in organization in which the activities like user requirement identification, request for information, cost estimation and vendor analysis are significant. The report also pointed out the issues in selection process and their possible solutions and recommendations.
Books and Journals
Alpers, S., Becker, C., Eryilmaz, E. and Schuster, T., 2014, September. A Systematic Approach for Evaluation and Selection of ERP Systems. In EuroSymposium on Systems Analysis and Design (pp. 36-48). Springer International Publishing.
Bradford, M., 2015. Modern ERP: select, implement, and use today's advanced business systems. Lulu. com.
Chou, H.W., Lin, Y.H., Lu, H.S., Chang, H.H. and Chou, S.B., 2014. Knowledge sharing and ERP system usage in post-implementation stage. Computers in Human Behavior, 33, pp.16-22.
Hung, W.H., Ho, C.F., Jou, J.J. and Kung, K.H., 2012. Relationship bonding for a better knowledge transfer climate: An ERP implementation research. Decision Support Systems, 52(2), pp.406-414.
Kazemi, A., Saeidi, S.R. and Azizmohammadi, M., 2014. Selecting an ERP system using multi-criteria decision making method: a goal programming and fuzzy approach. International Journal of Business Information Systems, 16(1), pp.55-71.
Khan, H. and Faisal, M.N., 2015. A Grey-based approach for ERP vendor selection in small and medium enterprises in Qatar. International Journal of Business Information Systems, 19(4), pp.465-487.
May, J., Dhillon, G. and Caldeira, M., 2013. Defining value-based objectives for ERP systems planning. Decision Support Systems, 55(1), pp.98-109.
Motiwalla, L.F. and Thompson, J., 2012. Enterprise systems for management (p. 245). Boston, MA: Pearson.
Ratkevicius, D., Ratkevicius, C. and Skyrius, R., 2012. ERP selection criteria: theoretical and practical views. Ekonomika, 91(2), p.97.
Schniederjans, D. and Yadav, S., 2013. Successful ERP implementation: an integrative model. Business Process Management Journal, 19(2), pp.364-398.