A framework for evaluating ERP projects

Abstract

The objective of this paper is to propose a methodological framework for dealing with the complex problem of evaluating Enterprise Resource Planning (ERP) projects. The competitive pressure unleashed by the process of globalization is driving implementation of ERP projects in increasingly large numbers. They occupy a dominant space in today's rapidly increasing IT investments. Paradoxically, researchers have noted a deteriorating trend of evaluation of these investments. Considering huge organizational stakes coupled with a high risk of failure associated with the ERP projects, it is imperative that they are properly evaluated. Conventional methodology, which reckoned cost displacement as the only benefit, has proved inadequate for modern IT projects that have decreasing scope for cost displacement and an increasing focus on effectiveness objectives. Effectiveness is a multi-dimensional attribute and is not amenable to easy quantification. ERP projects need multi-dimensional evaluation criteria and a methodology that extends into the implementation phase as their profile really shapes up in the latter. A solution, in the form of a process framework that incorporates participatory learning and decision-making processes based on Nominal Group Technique (NGT) and the evaluation methodology adopting the Analytical Hierarchy Process (AHP), is proposed. A case example is given to illustrate its applicability in practice.