AHP-Based Approach to ERP System Selection

Question: Discuss about the Essay for AHP-Based Approach to ERP System Selection. Answer: Introduction The report presented below discusses the AHP based approach to Enterprise resource planning system selection for a Bioplus cosmetic company in Greek. The document is been prepared on the basis of the goal or objective of the company they wish to meet by the integration of Enterprise resource planning system. The document explains their proper implementation requirement such as the total amount, time, and the kind of functionality they are looking for, the flexibility and reliability of the system and other factors that will affect the company. The overall idea of presenting the report is to have an idea that how the ERP system in the Bioplus cosmetic company plays a critical role and why it is been required by the Bioplus cosmetic company. Goal The firms aim was to provide its mobile users, ranging from sales people to beauty advisors, with more varied and integrated mobile communication and collaboration services than had previously been the case (Asl et al., 2012). A further goal was to enable staff to access exactly the same services on the road as they could at head office, no matter where they happened to be in the world. Endeavor asset arranging in combination with the corporate capacities that differs from each other and utilizes data innovation (Enea Muriana, 2014). The primary target of small scale or large scale assembling organization's Enterprise Resource Planning is tracking the network of the store; estimate the stock of the company and to manage the stocks and track the last shipment of the goods (Lee et al., 2012). If the organization follows this method this can enhance the sharing of the data and cooperate with the practical and the corporate boundary. ERP System Selection For the choice of the ERP framework the business procedure environment must understood. The ERP selection proceduce is a coordinated arrangement of projects that give backing to center business procedures, for example, generation, information and yield logistics, fund and bookkeeping, deals and showcasing and asset (Asl et al., 2012). As it were, an ERP framework is the data spine of an association and ventures into all regions of the business and quality chain (Oztaysi, 2014). Since it has a long and problematic implementation procedure, and is a very expensive investment, due to the high costs and risks in this systems it is important to select an ERP that adapt with organization requirements, selection is a complex process that need identification criteria and choosing a suitable and reliable approach for select an alternative from the available options. On the other hand the failure of an ERP project can cause the negative effects on organizational processes and bring irreparable damage for organization (Shen, Chen, Wang, 2016). An effective ERP venture includes supervision of the business process, selection of Enterprise Resource Programming and an agent commercial, actualizing this business process, and looking at the rationality of the new business process (Wang, Lin, Wang, 2013). Inferable from the multifaceted nature of the business situation the constraints in easy to get to the assets, and the differences of ERP options. Hence, it is important to make a healthy selection about which ERP fits the organization the most (Asl et al., 2012). The report presents a technique for selecting an appropriate ERP framework in light of fuzzy logic. This model has 3 inputs and 1 output. We use triangular fuzzy membership function for each criterion. Three criteria: functionality, cost and vendor support to evaluate the alternatives was presented. PriEsTis an acronym for 'Priority Estimation Tool' which is open-sourcedecision-making softwarethat implements theAnal ytic Hierarchy Process(AHP) method - a comprehensive framework for decision problems. PriEsTcan assist decision makers in prioritizing the options available in a given scenario (Chou et al., 2014). Criteria Recently many works in ERP selection is proposed, some of those presented a set of factors that important for ERP selection and a few of those presented methods based on mathematic approaches, fuzzy logic and AHP (Enea Muriana, 2014). In this section we introduce this works. Seven criteria for ERP selection in Bioplus cosmetic company is introduced. Some of those are (Reliability and Functionality) based on quality metrics in software and some of those are related to organization for example, cost, convenience, simplicity of customization and simplicity of usage and merchant notoriety is criteria for the company (Hasibuan Dantes, 2012). The criteria for ERP selection introduces functionality, reliability, fit with business process of organization, cost, level of customization, vendor support, compatibility, availability, vendor reputation, technology, module integration, fit with parent/allied organization system. This work has not an approach for ERP selection, only introduced criteria that important in ERP selection is presented in the report. In the proposed report an approach for selecting suitable ERP for organization based on AHP (Mijovic et al., 2016) is proposed for selecting the suitable ERP for an organization based on AHP. This method assigned adds weights to the criteria, and finally the ERP software is selected from the created hierarchy (Asl et al., 2012). Bioplus cosmetic company identifies 9 attributes like execution time, costs, and usefulness, ease of use, adaptability, unwavering quality, seller notoriety, merchant specialized ability, and merchant management. An investigation is done to assess the progress of the system to identify the effectiveness of application of the Analytical Hierarchical Process (AHP). The AHP and the numbers of fuzzy are used for selecting a suitable ERP for Bioplus cosmetic company. Their criteria are: maintenance cost, vendor good reputation, R and D capability, training performance, infrastructure cost, ease to in- house development, recovery ability, integration of legacy systems, vendor support, license fee, maintenance cost, vendor consulting performance, capability for the technical support, ability to upgrade, integration with ease, completion of the module, utility, security level, fitness, stability, easy of operations, ease to learn, standardization, ease to maintain (Saini, Nigam Misra, 2013). In this report a fuzzy logic approach for ERP selection is proposed. In this method they used 27 criteria such as: trust in the ERP framework, measured quality, possibility of the application of arrangement in industry, believability of the framework, incorporation ability of the ERP with the current Information Security/Information Technology, instinct of the Enterprise Resource Planning framework, adjustment of the Enterprise Resource Planning according to the present needs of the framework, capacity of the Enterprise Resource Planning framework to offer data on time, programming costs, counsel costs, support costs, equipment prerequisites, expert group necessities, high normal usage time, parameter multifaceted nature, venture arranging, probability of dispassionately characterizing the ideas, worker proceeding with training, normal age of the faculty, proceeding with instruction of the basic leadership bunch, proposals/suggestions made by the clients, customary authoritative society, many-sided quality of the hierarchical structure, superior, numb er of representatives/organization size, conventional hierarchical technique, intricacy of hierarchical procedures (Asl et al., 2012). In the utilized information envelopment investigation to assess mid-level ERP bundles. They used a broad investigation of the accessible elements and capacities and execution of different mid-level bundles in these elements and capacities (Silva et al., 2013). As to examination, the accompanying criteria were utilized: administration and encourage, preparing, adaptability, usage adaptability, mix, producing process, center financials, acquiring and deals, human asset process, global expense bolster, normal expense of bundles, support charges, preparing charges and normal execution (Wang, Lin, Wang, 2013). Multi-criteria supplier selection method is used in an analytic hierarchy process model to ERP selection. They used 4 criteria: strategic fitness, function and technology, vendors reputation and vendors ability. Fuzzy logic is used for the selection of the ERP model. In this method, recommended ERP bundles and sellers were looked at by a Fuzzy-AHP framework (Asl et al., 2012). Total Cost Price The implementation of ERP system in a large scale enterprise is very costly that may be up to millions of dollars. The cost of ERP implementation varies with the size of the company. Costs scale with company size (Refer to appendix) The quantity of clients and applications required for the most part correspond with the span of the business: Larger organizations ordinarily have more clients who need to get to the framework, and require more applications and more notable usefulness (Asl et al., 2012). The greater number of user accessing the system with more complexity in the system increases the price of the ERP system software. For a specialized business process, customization can be made for example if the company needs to launch a new product and change the manufacturing details the software must be flexible to change (Enea Muriana, 2014). The major question for choosing an ERP system for a business looking for new Enterprise Resource Planning software is to deploy a cloud based or on premise ERP system. The company can implement two types of ERP system and the pricing of both the system is different, the cloud based ERP system is available on the basis of subscription of billed per user per month (Kapp, Latham, Ford-Latham, 2016). The on premise systems are sold to the customer with a perpetual license. Figure 1: Cost of Implementation of ERP (Source: Katerattanakul et al., 2014, pp- 190) Maintenance Cost Depending on the trade, upkeep and backing might be incorporated, or may cost additional. With an on-reason arrangement, clients should even now pay yearly backing and support costs that keep running somewhere around 10 and 20 percent of the first permitting expense (Asl et al., 2012). Implementation Time Timeframe for the implementation of ERP in the Bioplus cosmetic company: Time period to project If there is a need of integration of another system in the current scenario the time frame would be increased. The phases of an ERP project are as follows: Time taken Phases 1-3 weeks Requirement analysis and specification 3-6 weeks Prototyping or setting up the ERP system for testing purpose 8-14 weeks Implementation or testing of the configured ERP system and development continues. 3-6 weeks User acceptance test and training to use the system Few days Live phase 1-2 weeks Live support Table 1: Implementation Time (Source: Created by Author) Functionality The use of the ERP in business can provide better control in the billing section of the customers and the sellers (Mijovic et al., 2016). The ERP has the ability to automatically handle the process and a better financial, operational and control over the accounts in the billing and the receivables. The Enterprise Resource Planning is also used for the accomplishment of the assigned task with the integration of the information system that causes a flawless flow of the data throughout the departments. An automated business process is very helpful for the management of the company (Oztaysi, 2014). As the Enterprise Resource Planning works on the basic rules of input and output in information technology it is also used as a MIS (management information system). An organization is treated as a single entity under the Enterprise Resource Planning (Asl et al., 2012). It caters the needs of the information in the organization as information plays the key resource of the organization to be the winner in the competitive market. The ERP structure gives important, precise and expediency data to all divisions on one programming structure (Saini, Nigam, Misra, 2013). The principle of the Enterprise resource planning is that the data can be upgraded at any instance. In Enterprise Resource Planning, the user can get answer to any question by posting an enquiry; the answer is imported from the office database (Asl et al., 2012). Computer programming is used to outline the business process of the company and work according with the needs of the client. ERP gives additionally all money related examination under fund modules and agree to India's and other universal bookkeeping benchmarks. ERP framework can without much of a stretch use in, social insurance, Government, budgetary, retail and other administration parts (Silva et al., 2013). System Flexibility Upgrade Ability The ERP system can be upgraded according to the user requirement such as: Illogical and unnecessary requirements Change in implementation and design of architecture Involvement of organization needs Uncertain need of consumer Demand in market place Change in shareholders expectations Ahead leap up or competitive catch up Change of priorities requirements The ERP system can be upgraded according to the change in technology and the developmental process of the company like Platform delivery External components interfaces Components change in third party Change in software development technologies and methodologies New and advanced technologies exploitation Old technology termination Up gradation in automotive technology Ease of Integration The company implemented the enterprise resource planning system to manage all the vital levels to enhance their communication (Zeng Skibniewski, 2013). It works as a management tool for a company where it implements their different departments and functions in the enterprise resource planning system. The department can be marketing, sales, purchasing, finance, etc (Asl et al., 2012). For an example, for a Bioplus cosmetic company each different department is responsible for managing their own system to make sure that they outline their tasks separately. But when the ERP system is been integrated in the company then each department can share the data and communicate effectively. One of the important benefits of integrating ERP system is the customer relationship management which is developed and designed to help the cosmetic business to enhance and maintain their customer information with accuracy (Hasibuan Dantes, 2012). System Reliability Undertaking measured organizations have it really simple as to ERP arrangements, in any event as far as unwavering quality. There are just 3 merchants to look over, and every one of the three are accustomed to managing extensive customers who expect only the best (Asl et al., 2012). SMBs have a much bigger field to browse as far as sellers to work with, however a littler possibility of getting a dependable item. SMBs need to do somewhat more footwork to ensure they wind up with an answer that works best for them. Reputation Financial Condition The finance module of an ERP system is used to gather the data regarding the finance and generate the reports such as trial balance data, quarterly statement of finance, overall balance sheet and generation of ledger reports in Bioplus cosmetic company. ERP software solution is used mainly in industry to manage the various business conditions. The information made accessible through an enterprise resource planning framework gives deceivability to key execution pointers required for meeting corporate destinations. Enterprise resource planning programming applications can be utilized to oversee item arranging, buy parts, keep up and monitor inventories, interface with suppliers, give client administration, and track orders. Scale of Vendor Choosing the right system for the implementation of the ERP in the Bioplus cosmetic company is a critical task for the company. Selecting the right vendor can help the company to develop at a rapid rate. The ERP system solutions are not available to the company as readymade software solution (Enea Muriana, 2014). The company has to make some tweaks on the choose ERP software to meet their requirement and the business that is looking to implement ERP software in their system must identify its needs and choose the vendor accordingly (Asl et al., 2012). Market Share There is a huge growth in the ERP system in the year 2013, the market share of ERP software grew to 3.8% in one year. In the year 2012 the worldwide ERP software market grew 3.8% from $24.4B in 2012 to $25.4B in 2013. SAP retained their market leadership position in 2013, selling $6.1B in ERP software up from $6B in 2012 (Kapp, Latham, Ford-Latham, 2016). Oracle is second with $3.117B in sales in 2013, down .2% from 2012s sales of $3.124B. Sage is third with $1.5B in sales in 2013, Infor is fourth with $1.5B in sales, and Microsoftis fifth with $1.169B in sales in 2013. The following graphic shows worldwide ERP software market share for 2013. Please click on the graphic to expand for easier reading (Asl et al., 2012). Alternatives Microsoft Dynamics NAV As part of Bioplus cosmetic company vision to create a single, integrated technology platform, it introduced Microsoft Dynamics NAV ERP system to run its key business operations. The next step was to move to cloud-based Office365, which saved the firm significant amounts of money in hardware, support and upgrade costs. Its subsequent migration to Lync, which was integrated with SharePoint and Exchange, supported further business growth by enabling enterprise-wide communication and collaboration for both road warriors and remote users (Kilic, Zaim, Delen, 2015). SAP The Bioplus cosmetic company picked in the report creates, delivers, and markets contemporary, moderate restorative and cleanliness items. To bring its clients and suppliers nearer together and make more esteem for all gatherings, the firm can execute SAP (Software Application Program) Advanced Planning and Optimization a segment of the SAP Supply Chain Management application and focused on a progression of new procedures. Impressive reserve funds have come about, making ready for comparative measures in different territories (Asl et al., 2012). SAP is an ERP bundle and is utilized as a part of the vast majority of the business organizations. Singular Logic Business ERP Enterprise Resource Planning (ERP) is the key system in a business organization that helps in the seamless operation of the systems and it also makes the executive managers to take decision quickly (Mijovic et al., 2016). Singular Logic Business ERP has an important role in the reek market and it offers Business solution for an enterprise of different sizes. The ERP package offered by the company is based on its own products integrated with international platforms (Lee et al., 2012). The software is integrated as a bundle and it ensures a good quality of service giving a high end satisfaction to the client. The requirement of the customers is meeting and the specified needs are also fulfilled, the singular Logic Business ERP is used in public sectors to customize the solution in a large scale. Conclusion This report concludes that an AHP based approach is used to find out which ERP system is valuable for a Greek Bioplus cosmetic company. 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