Analysing the factors affecting the selection of ERP package: a fuzzy AHP approach

Abstract

Contribution of small and medium scale enterprises is significant in development of any country, specifically developing countries like India. Therefore, synchronization and integration of their business processes and functions through effective and efficient information sharing is vital. Hence, enhancing their competence through the adoption of an appropriate Enterprise resource planning (ERP) system is crucial to improve their competitiveness in the competitive scenario. Under this backdrop, this paper analyses pertinent factors for selecting an appropriate ERP system for SMEs. This mix-method research involved triangulation design by merging both quantitative and qualitative techniques. Factor Analysis was applied for selection of relevant factors affecting ERP procurement decision. Fuzzy Analytical Hierarchy Process approach, based on triangular fuzzy numbers, was used to rank these factors. Further, sensitivity analysis was performed to ensure the robustness of the FAHP results. Cost of deployment was identified as the most significant criteria. On the other hand, ‘Vendor credibility’ was found to be the least significant factor. Criterion ‘User friendliness and Security’ and ‘Need fulfilment’ were ranked as second and third. ERP vendors can use these findings in developing appropriate marketing mix strategies. SME owners can also make use of these findings by collaborating with other SMEs for buying an ERP. This study can be seen as first attempt in investigating and ranking various factors affecting ERP adoption decision for SMEs, specifically in Indian context, using FAHP approach.