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smu mba assignment help of MI0038 1. a. Discuss about ERP software selection criteria. b. What is improper ERP system selection? Explain in detail

Answer: ERP Software Selection Criteria
When reviewing potential software suppliers, you tend to focus only on the potential product’s functionality and cost. Although these elements are important, this methodology neglects other areas of importance. A supplier’s ability to deliver product services goes well beyond price and feature options.
The key selection criteria include making few questions. Such questions help you simplify making an ERP software purchase decision. Some of the questions include:

· For Product Functionality
○ Does this package meet the overall requirements listing?
○ Is the menu structure easy to follow and understand?
○ Are the help files easily assessable and easy for users to understand?
○ Can you customise help to meet the needs of the organisation?
○ Is the product too complex?
○ Are there standard reports available, and are they useful?
· For Product Cost
○ Are the license costs justified given the functionality offering?
○ Is the required database affordable?
○ Are annual maintenance charges reasonable and in line with the industry average?
○ Are payments for annual maintenance charges in line with industry norms?
○ What is the true implementation services-to-software ratio for implementations with comparably-sized companies?
○ How quickly can payback be received?
· For Corporate Vision
○ What major organisational changes has the supplier made in recent years?
○ What major product changes have occurred in recent years?
○ What major product changes does the company foresee or have planned in the coming years?
○ What level of involvement does the executive staff have in the company’s daily operations? Is the executive staff knowledgeable of industry trends and developing technology?
· For Service and Support
○ Was the team comfortable with the sales process and representative?
○ Were the team’s questions answered in an open and honest forum?
○ Can the supplier provide a complete turn-key solution?
○ What type of training is available?
○ What is the average technical support person’s experience level and tenure with the company?
○ How quickly are the non-critical software bugs fixed?
○ Is 24/7 support available?
○ Does the supplier offer business process re-engineering as part of the implementation process?
○ Does the supplier have experience in similar industries?
· For Technology and System Architecture
○ Is the technology robust enough to handle current and future transactions load? Is it scalable?
○ Is the system’s speed acceptable for daily usage?
○ Is source code provided for customisations or modifications without hefty charges?
○ Do customisations hamper upgrading to future software releases?
○ Is the software Open Database Connectivity (ODBC) compliant?
○ Does the software support eCommerce, Radio Frequency (RF) and bar coding, and Electronic Data Interchange (EDI) transactions?
○ Does the software support multi-company, multi-division, and multicurrency environments? Are there any restrictions to this type of environment?
· For Supplier Longevity
○ How many years has the company been actively engaged in this software industry?
○ When was the product’s first release? What is the current release version being quoted?
○ Has the company been consistently profitable?
○ Has there been recent turnover in the management staff?
○ Has the supplier increased or reduced overall headcount over the last year?
○ Are customer references available? Can you visit a customer reference site prior to contract signing?
Improper ERP system selection
Not often companies adopt a fully objective system selection methodology when choosing an ERP System. Some of the common mistakes that companies resort to are:
· Incomplete set of requirements - Wallace & Kremzar states that "it requires people to do their job differently" 2 when a new ERP is implemented in an enterprise. Therefore, it is very important to understand the requirements of each user for current processes and for future processes.
· Reliance on vendor demos – Vendor demonstrations tend to focus on very simple processes. A typical demonstration shows an ideal order to cash process where a customer orders a quantity of product that is in stock. In most businesses, customers have varying and complicated commercial arrangements. In reality, products are not always in stock.
· Over-emphasis on system cost – According to Finlay and Servant “The differential in purchase price between packages is unlikely to be the dominant factor"3. While the cost of an ERP system is very important for a company, the companies do not focus on the other important decision criteria such as functionality, future proofing, underlying infrastructure [network and database], and e-commerce capability among others.
· Selection bias – It is not unusual that the ERP system purchase decision is made by one individual or by one department within the company. In such situations, an ERP system that may be excellent at one function but weak at other may be imposed on the entire enterprise with serious business repercussions.
· Failure to use objective professional services – One of the main reasons for failure in system selection is the lack of knowledge within the company. Taking the services of experienced consultants can prove beneficial. They provide excellent information on all the packages available in the market, the latest functionality, most importantly, can assist the you in deciding whether a specific requirement would provide added value to your business.

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