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Framework for Selection of ERP System: Case Study.

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DOI: 10.1016/j.promfg.2020.01.009

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 Available online at www.sciencedirect.com

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Alaskari,O*.Pinedo-Cuenca, R. Ahmad, M. M
Teesside University, Southfield Road, Middlesbrough, TS1 3BX, UK
Abstract

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Peer-review under process.
responsibility of the scientific committee of the Flexible Automation and Intelligent Manufacturing 2019 (FAIM 2019)

© 2019 The Authors, Published by Elsevier B.V.

* Corresponding author. Tel.: +447765008205
E-mail address: O.Alaskari@tees.ac.uk

2351-9789 © 2019 author.

* Corresponding The Authors, Published by Elsevier B.V.
Tel.: +447765008205
PeerE-mail
reviewaddress:
under the responsibility of the scientific committee of the Flexible Automation and Intelligent Manufacturing 2019
O.Alaskari@tees.ac.uk

2351-9789 © 2019 The Authors, Published by Elsevier B.V.

Peer review under the responsibility of the scientific committee of the Flexible Automation and Intelligent Manufacturing 2019
2351-9789 © 2019 The Authors. Published by Elsevier B.V.
This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Peer-review under responsibility of the scientific committee of the Flexible Automation and Intelligent Manufacturing 2019 (FAIM 2019)
10.1016/j.promfg.2020.01.009
2 Alaskari, O. Pinedo-Cuenca, R. Ahmad, M. M / Procedia Manufacturing 00 (2019) 000–000
70 O Alaskari et al. / Procedia Manufacturing 38 (2019) 69–75
Peer review under the responsibility of the scientific committee of the Flexible Automation and Intelligent Manufacturing 2019

Keywords: Enterprise Resource Planning; Small and Medium Enterprises; Selection

1. Introduction

Today competition is no longer local, but global, with companies increasingly required to reduce total costs,
maximize investment return, shorten lead time, and enhance customer demand response. For SMEs the changing
global economic conditions and greater competition cause additional challenges; thus, effective enterprise information
systems, to enhance competitive advantage are increasingly important. SMEs realise that it is imperative to make
better use of the information they have in order to make decisions that are more informed. Many SMEs understand
that survival will be determined by their ability to comprehend and acknowledge the importance of Information
Systems (IS) with accessibility to the right information at the right time (Sharma and Bhagwat, 2006b). In this regard,
ERP system are large comprehensive packaged IS aimed at integrating business processes and functions. ERPs have
gained importance and popularity as a technological enabling solution (Karsak & Özogul, 2009). Pellerin et al. 2007
argued that, companies will increase productivity, enhanced by access to information and managerial performance
data in decision-making by implementing ERP. Despite the advantages achieved by adopting ERP system, there are
many challenges such as, system complexities, organisational changes, and selection of the appropriate system. Hong
and Kim, 2002 argued that ERP, in many cases, will not meet the unique needs of a particular organisation. Thus,
finding the right ERP system to fit business processes is critical, elements of which are a competent system provider,
hereinafter described as the Vendor; system installation; managing organisation and business processes of change,
thus enabling successful ERP implementation. Haddara et al. 2012 & Aloini et al. 2012 have stated that successful
ERP project involves selecting the appropriate ERP; an inappropriate ERP system selection would cause the project
to fail, detrimentally reducing the company’s performance. Adopting ERP in SMEs is a difficult, costly and a time
consuming task, mainly due to the lack of available resources, unlike in large companies (Sun et al., 2005). SMEs,
with lesser resources, have added constraints in ERP adoptions as they often lack of modern Information Technology
(IT) infrastructure and experienced IT staff. The ERP system life cycle consists of mainly of three phases: Selection,
Implementation and Use (Kilic et al. 2015); the Selection Phase is the most critical for a successful adaption (Forslund
& Jonsson, 2010). Haddara, M., 2014, stated that, studying the capabilities of the potential ERP system to
accommodate the critical business processes of the organisation is the first step to insure a successful ERP; an
inappropriate ERP system may cause financial losses, the loss of competitive advantage, even company failure.
Therefore, this paper focuses on ERP selection process, providing explanatory case study conducted in a SME located
in the United Kingdom (UK), introducing a theoretical framework for the identification of specific steps that were,
and should be taken into account for an SME to select an appropriate ERP system in general.

2. Methodology

A qualitative approach was adopted to explore and validate a developed framework. Silverman (2001) argued that
qualitative, rather than quantitative; data provides a deeper understanding of certain phenomena. Yin (2009)
mentioned that case studies collect rich data and are appropriate to study a contemporary phenomenon within its
natural setting, hence this approach was chosen. Literature review was used as secondary source of data (journal
articles in various databases); to develop theoretical framework; and then a single case study was conducted to validate
the developed framework. The data was gathered from the company as the Facilitator, the author, has accessed all of
the company’s historical data, included project documentation, internal organisational documents, company profile,
also meeting with key staff who describe all the business processes they conducted in their day-to-day operations,
then the Facilitator compiled and modelled all information as a business process map, and finally, the obtained data
from the case study was analysed using Microsoft Excel, external support from Teesside University was obtained.
 O Alaskari et al. / Procedia Manufacturing 38 (2019) 69–75 71
Alaskari, O. Pinedo-Cuenca, R. Ahmad, M. M / Procedia Manufacturing 00 (2019) 000–000 3

3. Overall Theoretical Framework

The developed framework was designed to help SMEs select an appropriate ERP system; accordingly, company
performance will improve, accomplishing the aim of this study. Due to the limitations faced by SMEs, the construction
of a suitable framework was essential; to take into account particular issues in the SME context, such as cost
effectiveness and straightforward implementation. Since every SME is different, there will never be a perfect
framework that will work for all SMEs; hence, this research provided a logical and simple theoretical framework.
Figure 1 illustrates the three basic phases of the framework namely: Define, Evaluate and Select. Each of the three
phases is divided into further steps, which includes activities. This framework initially defined and assessed the
company’s current processes (Define), then an evaluation of ERP Vendors of necessary IT system, considering the
related functionalities and modules which the respective Vendors offered (Evaluate). By conducting these two phases,
a clear picture will be formed to enable selection of the appropriate ERP system for the company (Select), the
developed framework is a means, not an end in itself.

Fig. 1. Three phases of developed theoretical framework

4. Case study

4.1. Background about the company

Industrial & Marine Hydraulics Limited (IMH), a UK company incorporated in 1983, is a dynamic, rapidly
expanding enterprises in the hydraulic industry, aiming to be a world class player by exploring local and international
opportunities, improving its flexibly to respond to the challenges of today’s global marketplace. IMH currently has
30 employees, thus by European Commission (EU) definition a SME, of small enterprise status. IMH serve a wide
range of companies across multiple sectors that offer different types of services and products included Automotive,
Industrial, Infrastructure, Marine, Nuclear, Oil & Gas, Petrochemical and Renewables. The company used various
independent IT systems such as Sage 50 Accounting, Customer Relationship Management (CRM), Job Costing and
Microsoft Excel, these systems do not interact, which causes difficulties for the company to manage the complexity
of production schedules, maximising equipment and labour use. IMH realised that faster response to the market
required interaction across the company, streamlining processes, with increased information availability. They decided
to re-engineer and automate current process of the company and implement an ERP system, to improve performance
and strengthen their position in the market. The ERP selection process in IMH started in March 2018 and was
completed in December 2018.

5. A framework for selecting an appropriate ERP system

The proposed framework aimed to enhance the overall ERP implementation outcomes, and identify an overall
roadmap for SMEs to assist decision-making to select the appropriate ERP system. The developed framework consist
of three main phases: Identifying current company processes and requirements, Evaluation of ERP systems and
Selecting the most appropriate ERP system that fulfils the company’s current and future requirements. These phases
support each other as shown in Figure 2. All the key staff members of the company are involved during the process
for variable periods of time.
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4 Alaskari, O. Pinedo-Cuenca, R. Ahmad, M. M / Procedia Manufacturing 00 (2019) 000–000

Fig.2. A framework for selecting an appropriate ERP system

5.1. Define phase

This phase consists of two steps: assessment and develop request for proposal.

a. Assessment

The first step identified the current company processes, by mapping, and walking through each processes by the
respective departments, the Facilitator, asked all key staff to describe every business processes they conduct in daily
operations to determining the key activities carried out within the company.

b. Develop request for proposal

After determining the key processes alongside their steps, this information was used to compile and developed a
Request for Proposal (RFP) document. This document consisting of three main sections: Company background, Key
features and functions alongside with their requirements, and cost summary tables. The initial RFP document was
reviewed by the key staff who added/altered any features and functions to ensure that all necessary features and
functions were captured in RFP and thus included in the ERP system. Finally, the Facilitator and the top management,
reviewed the staff feedback and determined the impact of each functional requirements from the company’s point of
view, these functionalities were prioritised using a M-D-N scale:
• Must have (M) = Critical requirements to the business at present.
• Nice to have (N) = Requirements that would be nice to have in time and are not appropriate at this time.
• Desired (D) = Important requirements to the business in a near future but not necessarily at present
Using M-D-N scale, with scores weighted to differentiate and determinate the degree of importance of each function
from the company’s point of view where M = 9; N = 3; D = 1, the factor of three between each score helped to clarify
to differentiation the significant importance of each function. Table 1, an exemplar, shows the functionalities
requirements (Column 2), their level of impact (Column 3) were listed in the tables in RFP and the Vendors were
request to complete Columns 4, 5, 6, and 7.

Table 1. An example of RFP.

1 2 3 4 5 6 7
ID Function Impact CM? Y/N Dev? Y/N 3PSW Name Ind. cost
1 Requirement X1 M
2 Requirement X2 N
3 Requirement X3 D
…
n Requirement Xn
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Alaskari, O. Pinedo-Cuenca, R. Ahmad, M. M / Procedia Manufacturing 00 (2019) 000–000 5

Whereas:
• CM? Y/N: Requirement is part of the core module of the system. Yes/No answer required
• Dev? Y/N: Development will be required to deliver the requirement. Yes/No answer required. Please provide
indicative costs.
• 3PSW name: The system cannot deliver this requirement, but can be delivered with a 3rd party software, with
working integration links and application program interface (API) to the current versions of the 3rd party software.
This needs to be answered with the 3rd party software application.
• Ind. Cost: Indicative costs for development of any additional functional requirement should be identified and
detailed in the cost summary attached at the end of the document.

5.2. Evaluate phase

a. Conducted survey about the ERP vendors

As much information about Vendors as possible, from all possible sources including the internet, magazines, and
exhibitions, was gathered to consider the related functionalities and modules which the respective Vendors offered.
Conference calls and brief online demo was conducted to provide an initial filter of vendors. 13 potential Vendors
were identified from this survey.

b. Send RFP

The developed RFP document was sent to 13 identified Vendors or their representatives with a request to respond
to general questions, related functional in Columns 4, 5, 6, and 7 of the Tables, and cost summary tables, within a time
deadline.

c. Analysis the respond of RFP

Of the 13 Vendors, seven, following their consideration of the RFP document formed the opinion that their system
was not appropriate for this company’s requirements, and withdrew. This has to be regarded as a positive response,
indicating the benefits of the RFP document. The remaining six responders to the REP were analysed, and their
respective results were compared and contrasted. Table 2 shows an example of an analysis of RFP where the Vendor
having responded Yes in Column 4 was assigned 1; a response Yes in Column 5 was assigned 0.5; and a response Yes
in Column 6, was assigned 0.75. The reason for weighting 1 in Column 4 was because this requirement is part of the
core module of the system, and no extra cost or time was require to obtain this requirement; however, weightings in
Columns 5 or 6 of .05 and 0.75 respectively indicates that these requirements are not part of the core module of the
system, and both additional cost and time was require to obtain this requirement; the indicative costs were captured in
Column 7, reflected on an overall score, that help to distinguishes between the respective ERP systems. The value in
Column 3 was multiple by the value in Columns 4, 5, and 6 and sum give 11.25. After that, the summation of the
values was normalised to create the mechanism of percentage.

Table 2. An example of analysis the respond of RFP.

1 2 3 4 5 6 7
ID Function Impact CM? Y/N Dev? Y/N 3PSW Name Ind. cost Sum
1 Requirement X1 M=9 Y=1 9
2 Requirement X2 N=3 Y=0.5 1.5
3 Requirement X3 D=1 Y=0.75 0.75
…
n Requirement Xn
Overall 11.25
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For speed and ease, this analysis was conducted using Microsoft Excel. Figure (1) illustrate that result of a Vendor
response where: 85% of company functionalities requirements is available out of the box, (Column 4); 12% of
functionalities required some customisation, (Columns 5 and 6); 3% of the functionalities requirements are not
available.

Fig. 3. Shows result of a Vendor response

As result of this analysis, three Vendors were excluded, on the grounds of poor functionality of the system, and
were so informed. The remaining three proven to be accommodating and compliant with most of company’s business
processes, were contacted and offered a visit to IMH’s location to gain company knowledge.

d. Demonstrating the system

The three Vendors were invited to demonstrate their system at IMH’s headquarters, having been provided with a
demonstration script containing real data in advance of the demonstration date, to enable them to prove that their ERP
system would meet the company’s requirements, also to clarify strengths and weakness in specific modules and their
impact on the business. The demonstration script covered four scenarios: standard jobs, emergency jobs, component
sales jobs and general requirements. The reason of developed script was that Vendors demonstrated the quality of
their system to manage different jobs pertinent to the company, rather than the normal demonstration of the best
elements of their own system. One full day was allocated for this exercise; the relevant staff attended the demonstration
of the module/functionality relevant to their job. For example, when the modules/functionality of marketing and CRM
was demonstrated the marking and developing staff attended that section. Such staff involvement was designed to
generate dialogue, feedback and greater stakeholder feeling in the project, with the aspiration of reducing resistance
to change at the implementation stage. After the demonstration, one Vendor was excluded, because their quality was
lower than that of the other two who were invited to return for second round to address questions raised at the first
demonstration, and to enable the demonstration of other modules/functionality. The demonstration script was modified
for the second demonstration, and a half day was allocated for this exercise. The last step before final decision-making,
both Vendors were asked to provide two references from their current customers using similar type of processes to
that of IMH or operation in a similar industry, and to arrange a conference call or site visit with them. Due to time
constrains the Facilitator and the top management decided to conduct both a conference call and a site visit to the
reference of the now preferred Vendor, and to conduct conference call with another reference. The successful ERP
system managing the same type of business processes with organisation can be considered as key criterion for the
selection the ERP system.

5.3. Selection phase

Many factors were taken into account to make the selection decision, first, an essential factor, considered was the
functionality of the ERP system, carrying a heavy weight in the whole decision evaluation procedure, as the system
must have no less than adequate modules relating to the company main activities, and supporting the critical business
processes, with the system capable of integration with other systems such as: Computer-aided design/Computer-aided
manufacturing (CAD/CAM) package and Microsoft Project; that the company may be using to accomplish specialised
requirements. From this perspective, integration with other systems is considered to be a crucial criterion for selecting
the ERP solution. Another factor is that the ERP system should have mobile application compatibility with cell phone
and tablets used within the organisation. Further, considering this process create a long relationship with the Vendor
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Alaskari, O. Pinedo-Cuenca, R. Ahmad, M. M / Procedia Manufacturing 00 (2019) 000–000 7

rather than one off purchase, as there will ongoing after sale support, thus, the reputation the ERP vendor was taken
in consideration to ensure that this is the right vendor with whom to partner. Overall, the decision was made based on
functionality ease rather than cost.

6. Conclusion

It is essential for SMEs to implement ERP system to successfully trade in the existing competitive environment;
however, due to many SMEs’ limited knowledge regarding ERP system, the literature indicated that a need existed
for more research into a framework for selecting appropriate ERP system, primarily for SMEs. Thus, a theoretical
framework that can be used by SMEs to select the most appropriate ERP system was developed in this study, the
framework consist of three phases: Define, Evaluate and Select. The framework was developed and validated using
case study approach, the results of a case study indicated that the proposed procedure is useful for selecting a
successful ERP system for SMEs according to the company processes, instead of using so called “common sense” or
blind selection. Additionally, a benefit of this developed framework is that appropriate ERP system was clearly
presented to the top management, and thus gained their confidence in implementing the ERP system. In the next stage
of this work, IMH will implement the selected ERP system; this can be considered as a further way to evaluate the
developed a theoretical framework.

7. Future work

The results from a single case study cannot be generalised, however, it can provide important insights and
directions for future research. Therefore, to generalise application of the developed framework, further research case
studies for SMEs; in-depth analysis will be necessary.

8. Acknowledgements

This work was generously supported by IMH, along with the collaboration of Teesside University. The authors
would like to thank everyone who helped and contributed in this work.

9. Reference

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