Intelligent Information Ma nagement, 2011, 3, 1-16
doi:10.4236/iim.2011.31001 Published Online January 2011 (http://www.SciRP.org/journal/iim)
ERP Software Selection Processes: A Case Study in
the Metal Transformation Sector
Antonio Hidalgo1, José Albors2, Luis Gómez3
1Department of Busi ness Administration, Universidad Poli t écni c a de Ma drid, Madrid, Spain
2Department of Busi ness Administration, Universidad Politécnica de Valencia, Valencia, Spain
3EMVS, S.A., Madrid, Spain
Received December 13, 2010; revised January 8, 2011; accepted January 11, 2011.
Abstract
When a firm decides to implement ERP softwares, the resulting consequences can pervade all levels, includ-
ing organization, process, control and available information. Therefore, the first decision to be made is which
ERP solution must be adopted from a wide range of offers and vendors. To this end, this paper describes a
methodology based on multi-criteria factors that directly affects the process to help managers make this de-
cision. This methodology has been applied to a medium-size company in the Spanish metal transformation
sector which is interested in updating its IT capabilities in order to obtain greater control of and better infor-
mation about business, thus achieving a competitive advantage. The paper proposes a decision matrix which
takes into account all critical factors in ERP selection.
Keywords: ERP, Information Technologies, Metal Transformation Sector, Business Processes,
Reengineering Processes
1. Introduction
In our research Enterprise Resource Planning (ERP) re-
fers to software suites that integrate data and applications,
the information flow, and the business processes used in
the company, in order to have a fully integrated database,
ensuring unique results for all the different queries [1].
These suites have developed complete modules for each
standard functional area (finance, operations, purchasing,
sales, projects, human resources, etc) in a standard en-
terprise, in a standard market, although they sometimes
require some customization to be adapted to the specific
problems of each enterprise or market.
These solutions are reshaping business structures be-
cause they promise to solve the challenges posed by
portfolios of su pposedly uncoordinated busin ess applica-
tions, which are also related to business process innova-
tion [2,3]. The aim of these kinds of software develop-
ments is to integrate a process-oriented organization and
information flow into the enterprise to help management
be closer to accurate online information with an intelli-
gent analysis of business data. Because the data available
is the same for each person working within the company,
software suites will also help organizations to manage
their own r esources .
The implementation of an ERP means removing barri-
ers between persons, business processes, information and
locations. The benefits associated with ERP systems are
both tangible and intangible [4] and can be shown in all
dimensions of a business. When ERP is implemented
successfully, it can reduce development time of business
transactions, facilitate better management and enable
e-commerce integration [5].
Researchers have found that ERP implementation has
become the largest information system project investment
in companies worldwide and this investment is expected
to continue for the coming years [6]. Compared to other
business solutions, ERP implementation solutions are
preferred because of their quicker implementation and
development process than in-house developed software.
External exclusive development also offers a high quality
system, but with its own problems, such as acquisition
uncertainty and hidden costs in implementation [7].
As these ideas reveal an important iss ue for enterprises,
the fact that three quarters of the ERP projects have been
judged unsuccessful by the ERP implementing firms [8]
becomes a major problem or that one half of ERP im-
plementations are judged to be failures [9] with serious

A. HIDALGO ET AL. 2
consequences, including bankruptcy [2,10]. The reasons
could be due to the differences in interests between cus-
tomers, who want a unique solution especially ad apted to
their enterprise [11], and vendors who prefer generic
solutions applicable to a broad market.
Before ERP implementation can take place, the or-
ganization m ust be reengineered as part of the total pro ject
in order to adapt the enterprise to the stronger process-
oriented way of work facilitated by the ERP. Several
streams of literature have p roposed foundational theories
for ERP implementation. One of them focuses on the
interaction between ERP and organizations [12], identi-
fying ERP implementation with organizational factors
such as different types of organizations which require
distinct organization fitting processes [13] as well as con-
tingent approaches [14]. Another stream focuses on risk
factors, identifying key risk factors in each implementa-
tion phase [ 10], and a nother in vestigates the k ey factors in
process fit and user fit [15]. Finally some authors have
outlined cultural aspects [16] and those problems related
with ERP integration in SMEs [17].
Generally, we can say that ERP vendor s and enterprises
have been aware of these risks that affect the success of
software implementation [18], and the important role
management has in it. The implementation requires an
enormous effort from the firm; it involves organizational,
operative and internal changes. However, the organiza-
tions that have successfully adopted ERP systems view
them as one of the most important innovations that they
have carried out, including tangible and intangible im-
provements in a variety of different areas. Another chal-
lenge is to decide whether it is necessary to change the
company processes to fit the ERP or whether it is neces-
sary to adapt the ERP to the processes of the company
[17]. This issue is critical in cost and time.
Failures in ERP implementations have been related to
different causes and these must be analyzed before the
implementation begins, in each case taking active actions
to decrease failure risks. These causes have been docu-
mented by critical success fact ors re views [19,20]:
• Active management of the changing environment.
• Culture of the organizati on.
• Adequacy between organizational structure and
ERP.
• Business process reengineering approach.
• Enterprise organizational characteristics.
• Communication.
• ERP teamwork, composition and leadership.
• Monitoring and evaluation of performance.
• Project management.
• Software development and testing.
• Top management support.
• Data management.
• ERP strategy and implementation methodology.
• Training and education.
• ERP vendors.
With these reviews of the most common problems cited
by literature, we must note that not all ERP software has
the same scope, neither has it the same process orientation
or specialty. Each developer has designed the software
with his own view of a standard enterprise in mind, and it
is possi ble to fi nd ERP designe d for sm all or medium -size
firms oriented to hundreds of movements per year and
others for large firms for thousands or hundreds of thou-
sand movem ents per year. Therefore, it does not mean that
the software cannot work in either size company, but
rather that the hardware requirements, the internal proc-
esses, and the data have been created for and optimized
with these quantities.
You can also find different types of ERP vendors and
types of licenses. License type should represent a long
term commitment to a technology or with a specific
vendor. We identified at least three major types of li-
censes: Open Source GPL, public licenses that restrict
some aspects of the use or distribution, and owner licenses.
Being sure that the ERP selected is the most adequate for
our company processes and way of work will help im-
plementation success. Therefore, we want to focus on the
choice of the ERP software to be installed, after carrying
out an analysis of the scope, processes, requirements,
pricing, etc.
The objective of this paper is proposing a relevant de-
cision matrix, with the different options available, by
following a methodology and organizing a close-to-real
pilot test that probes the critical issues. We must also
determine what personalization or developments should
be carried out to fit the standard ERP to the bus iness, the
scope of these developments and to distinguish between
software development, reports, adaptations or renaming
of fields or labels, and the cost involved.
This paper has the following structure. After this in-
troduction, we describe the indu stry context: the Spanish
metal transformation firms in Section 2. In Sectio n 3, we
discuss the ERP evaluation factors and the analytical
process involved, and then in Section 4, we apply this
methodology to a Spanish metal transformation firm,
obtaining a decision matrix to help us to decide the ERP
software brand to be installed. Finally, Section 5 con-
cludes the main recommendations obtained in the im-
plementation of the methodology.
2. The Spanish Metal Transformation Firms
ERP philosophy has been designed in an attempt to satisfy
all kinds of companies in almost all sectors, using pa-
rameters to fit each one. This aspect requires implement-

A. HIDALGO ET AL. 3
tation teams to have a profound knowledge of the sector in
order to fit the ERP to the profile of each company.
At the European level, the e-Business Watch survey,
financed by the European Commission [21], compared
the IT situation of the metal transformation sector with
all sectors. Figure 1 shows the average diffusion of
on-line technologies for the different types of applica-
tions. In two applications, the metal transformation sec-
tor outperforms the average: the usage of ERP systems
(25% in metal products and 20% on the average) and in
Internet-based knowledge management solutions (12% in
metal products and 10% on the average).
In order to discuss the ERP implementation state of
the sector, we have found data which shows the percent-
age of ERP implementation in firms segmented by size.
Figure 2 illustrates the differences in each size. While
Source: European Commission, 2003.CRM
Figure 1. Average diffusion of information technologies.
Source: European Commission, 2003.
Figure 2. Usage of online technology for internal processes.

A. HIDALGO ET AL. 4
large companies have an ERP implementation level close
to 60%, in medium-sized enterprises it reaches 30% and
in small firms around 8%. It can observed that ERP has
been largely implemented in large size companies, as the
benefits for them in relation to location and importance
of real time data access are more obvious. Also, the cost
involved in this implementation is a minor factor com-
pared to that for small and medium size co mpanies. These
results have to be extrapolated to the Spanish environ-
ment.
To analyze the Spanish market and examine the pro-
file of the metal transformation firms, we used the data
from the Spanish National Institute of Statistics (INE).
The total number of Spanish firms is about 47,002, dis-
tributed by sub-sectors according to Table 1. Over 50%
of the firms belong to the sub-sector of the manufacture
of metal products for construction, and 20% are in the
sector of metal treatment and coating. The remaining
companies are located in other sub-sectors as the manu-
facture of articles of cutlery, tools and hardware, the
manufacture of metal products, except furniture, and forg-
ing and stamping.
The distribution of firms by size clearly shows that the
main group of the metal transformation sector consists of
companies with fewer than 10 employees (83%), while the
medium -sized ent erprises c omprise 15%, and o nly 2% are
large companies. Therefore, we can say that the typical
firm in this sector is a small size company with less than
20 workers.
In order to analyze the fit between the various ERPs
and the firms, it is necessary to begin by identifying the
basic business processes in all activities of a metal trans-
formati on company . In gen eral, we can identify five basic
activities: purchasing, sales, production, stocks, and finan-
cial. The main processes in each activity are the following:
• Purchasing: orders, partial or total deliveries, price
or quantity variations, consultation of price, stock
availability, reserved stock, management of pro-
viders.
• Sales: quotations, delivery times, sales prices, new
products, customer relationship management (CRM),
client discounts, special offers.
• Productio n: op e rat i ons, product i on or der s .
• Stocks: value and cost of stock (average, medium,
LIFO (last in, first out)), reserved or availabl e stock,
automatic reordering at minimum stock levels, mi-
nimum stock warnings, raw materials, stock de-
valuation, obsolete stock.
• Financial: accounts, fixed assets, taxes formats and
communications, bank communication, structure,
data imports from past years.
Our aim is to identify the flow of information of all
processes inside the activities, especially those aspects
considered in the normal management of the business, in
order to analyze the processes and applications require-
ments. To analyze fit between ERP and business proc-
esses, attention must be paid to the flow diagram of each
process.
3. Evaluation Factors and Analytical Process
The scope of an ERP implementation project should vary
in each case, but when analyzing processes, all possible
interactions between these processes must be contem-
plated. Another important consideration is whether the
main area processes have been included in the scope. If
they have been excluded from the implementation scope,
the information we get from the data will not be as valid as
we need.
All requirements should be structured taking into ac-
count two ideas: those processes within the scope that
must be integrated in the ERP, and those that consider
ERP as external software. These needs must be contem-
plated especially if some areas are not to be integrated.
This could be the case if in the project, some processes
have to work with an older application. In this case, we
must be sure that, for example, the scope of implementa-
tion takes into account that such processes will be working
Table 1. Total number of Spanish firms by princ i pal ac tivity.
Sub-sectors No. of firms %
Manufacture of metal products for co nstruction 25.450 54,1
Manufacture of tanks, reservoirs and metal containers, radiators 1.306 2,8
Manufacture of steam generators 60 0,1
Forging, stamping and forming of steel, powder metallurgy 1.961 4,2
Metal treatment/coating 9.521 20,3
Manufacture articles of cutlery, tools and hardware 4.413 9,4
Manufacture of metal products, except furniture 4.291 9,1
Total 47.002 100,0
Source: INE, 2008

A. HIDALGO ET AL. 5
in an old platform or application to ensure that integration
will be possible and data integrity will be guaranteed. In
the first group, we will find that many processes fit in the
standard ERP solution, but others will need to be adapted
to the ERP, or the ERP reprogrammed to fit company
processes. Those are customized processes and the manner
in which they are to be adapted is a major evaluation factor.
The diagram below identifies a taxonomy of applica-
tions in accordance with the scope of the implementation,
i.e., which are to be replaced with standard applications of
the ERP function and which need to be linked to the ERP
(Figure 3).
The final task is to identify a list of processes and ap-
plications. We must analyze those that can be classified
as standard functional requirements to be covered by
ERP and are not critical to the election. Then, we can
focus on special processes and applications. This tax-
onomy should be different for each of the ERP options,
which then must be developed by the vendors, and later
tested in the pilot. Additionally, we must analyze the
applications currently used in the company, what the
functions do, and how they i nteract with others, if they do.
When a firm makes a decision of implementing an
ERP solution, the first question to be asked is: which is
the optimum alternative. Normally, some employees
should have prior experience with some applications. As
the basic objective is to define a decision analysis meth-
odology, we propose a five step structure (Figure 4) that
has a distinct scope, concerning persons and groups in
charge, and resources, and in each of them we will dis-
cuss the objective.
Step 1 - Determine scope and requirements
When a firm has to make a selection between the dif-
ferent options of ERP vendors, the firm must be clear
about the scope, the approach definition, the requirements
and the criteria to evaluate. The objective in this first step
is to be sure that the firm understands what is going to be
developed and replaced, the implications and the people
affected.
The first sta ge begins by ide ntifying what i s involved in
the implementation scope, the geographical issues such as
dispersion of the firm, multi-country and language needs
and general functional requirements. After that, a tem-
plate of functional requirements and functional areas must
be filled out. As stated previously, personnel involvement
is a key factor.
Figure 3. Process categorization framework.

A. HIDALGO ET AL. 6
Figure 4. Methodology steps.
The most intense work load is normally the identifica-
tion of p rocesses. First, the global f unction involve d in the
implementation scope must be identified. For example,
inside purchasing we must consider all the general ac-
tivities or sub-processes: orders documentation, mainte-
nance providers, delivery times, non-storable products
such as transports, etc. For each sub-process, a flow chart
has to be designed to identify th e decisions involved, the
beginning and end of the process, and the interactions
with other processes. At this point in the project, col-
laborat ion bet ween ma nagement and wor kers is i mporta nt
because a correct identification and definition of proc-
esses will help in all steps of the implementation.
Finally, a spreadsheet with the all sub-processes is
made up, with a flow chart of each sub-process and an
explanation how it works. It is important to identify a
short ERP vendors list which can be m anaged comfortably.
Step 2 - Criteria to be evaluated and RFP
In this step, a criteria evaluation must be generated
together with a weighted column of those points that
should be determinants in the implementation, such as the
completion of the initial processes list, technology archi-
tecture needed, cost and duration of implementation,
maintenance, training. The weights are assigned accord-
ing to the firm’s needs, priorities and overall objectives.
After this step, a Request for Proposal (RFP) is devel-
oped with all criteria that must be evaluated, with an ex-
planation of the requirements about compliance or devia-
tions, the vendor’s assumptions, implementation success
experiences and pricing. Finally, the RFP must be sent to
all the ERP vendors included on the list.
Step 3 - Compile questions and responses for the RFP
The purpose of this step is to answer the ERP vendors’
questions and to be sure that all requirements are under-
stood correctly. Afterwards, all ERP vendor responses
must be compiled into the RFP and the implementation
alternatives, solutions for special processes, and applica-
tion requirement s given by the vendors studied.
Once this step has been completed, ensuring that spe-
cial requirements, alternatives and technical solutions are
checked, different demos should be prepared with each
vendor to clarify any weak points. After the pilot is pre-
pared, and all the information is compiled, the complete
offers are ready to be evaluated.
Step 4 - Analysis of offers, costs involved and resources
needed
When the offers are received, all aspects of them must
be analyzed: the responses to special requirements, the
resources proposed, the range of costs, and the imple-
mentation plan, including time, work load and resources
involved. After this analysis, any doubts must be identi-
fied and the questions resent to the ERP vendor.
It is important to remember that errors may occur;
therefore, our summary for each ERP vendor must be
revised by other colleagues.
Step 5 - Select i on and procurement of licens es
Once the ERP vendor has bee n selected, the next step is
to initiate negotiations to adjust licensing, prices, the
maintenance con tract, and actualization issues. This final
step must comprise all points of our criteria to ensure a
global context implementation and specify the teams
involved, the people in charge, the schedule and penalties,
if need be.
Another critical aspect is the communication of deci-
sions to the e nt ire com pany, keeping workers informed of
the schedule and scope, especially those affected by
strategic tasks inside the company. Resistance to change
is always a critical aspect in the implementation period.
4. The Methodology Approach
The case study is focused on a medium size company (20
workers) in the Spanish metal transformation sector
which was interested in updating its IT capabilities to
attain greater control of and better information about
business, thus achieving a competitive advantage. The
approach represents step one and two of the methodology
in a real situation.
4.1. Characteristics of the Firm
The company is completely automated having highly
robotized productio n lines. It has two business lines. Th e
first pro duces standa rd produc ts, with a yearl y deman d for
large quantities at a low cost. The second is focused on
projects on-demand, with engineering, design, prototype-
ing and a short life cycle. The response time must be
expeditious, with delivery in 24 hours.

A. HIDALGO ET AL. 7
The customers are mostly local firms. The company
needs to be as close to them as possib le since the cost of
transportation represents a significant expense and the
quantity and price of each order is not high enough to
offset this cost.
One of the main characteristics of the metal processing
sector is that it is very sensitive to price. Because of this,
the size of the company is crucial to obtain the best prices
from t he su ppl i e rs a nd the best m anufac t uri n g vol u m e. Its
main suppliers are major steel producers or processors.
This makes it necessary to acquire large volumes of raw
materials to achieve a competitive discount advantage.
The interaction between these two aspects makes a me-
dium size optimal for a company in this sector, as statis-
tics show.
The organization within the co mpany is a typical fu nc-
tional organization, as shown in Figure 5, with each de-
partment in charge of its own functions.
4.2. Software and Functionalities
The analysis of the business operation in terms of installed
applications show s the existence of different applicatio ns
in each of the functional areas (purchasing, production,
sales, etc), but no information flow between them. This is
evident from the map of applications reflected in Figure 6.
The firm operates using the following applications:
• Purchasing software in MsAccess with local data
(internally developed).
• Sales software, with local database, also in MsAc-
cess and no link between any other programs or
database (externally developed).
• Operations control and productivity with written
weekly reports (no software, done manually).
• Stock control (no software, controlled manually).
• Material Requirements Planning (MRP) (done
manually, aided by spread sheets written by the
Technical Department, and stored on a common
hard disk ).
• Work orders are not automated. Workers must
know what is needed in order to manufacture an
order.
4.3. Scope and Requirements
Our aim is to integrate all applications and departments
in two phases. The first will consolidate all applications,
except accounts software. When the operation is success-
ful, the second phase will include accounts.
Once this scheme has been approved, all the processes
must be analyzed and adapted to the functionalities and
characteristics of the ERP software, with the help of the
people in charge of each process. Everyone in the or-
ganization must be involved to ensure that all types of
eventualities have been included. The new flow chart of
the company is reflected in Figure 7 and represents how
the processes will be developed after this analysis.
The ERP software design includes finances, sales and
distribution, CRM, e-commerce, purchasing (MRP and
MRPII), stoc k ma nagem ent and operat io ns supp ort insi de
a unique system, all integrated. After a first contact with
different vendors and software, we noticed several solu-
tions with different license approaches:
• Property license such as Microsoft Dynamics Nav,
SAP Business One and JD Edwards.
• Open Source (GPL license), such as Abanq and
OpenErp.
• Public licenses that restrict some aspects of the use
or distribution, such as Open Bravo and Compiere.
Following the analysis, we identified which processes
fit with a standard flow (supported) and which had to be
customized initially (Table 2). For example, the pro-
cesses relating to Calculation of Estimated Cost of existing
products, or Reserve Stock, meet the standard require-
ments offered by a commercial ERP and required no
customization. On the contrary, the processes related to
Figure 5. General chart of the firm.

A. HIDALGO ET AL. 8

Figure 6. Applications map.
Figure 7. New general flow chart.

A. HIDALGO ET AL. 9
Table 2. Processes and application table.
Processes ERP Supported Customization required
Proposal Management (Sales)
Proposal releases management X X
Estimated time of delivery X X
Existing products (estimated cost calculation) X
Non existing products (proposal creation and valuation) X X
Purchasing
Split components X
Reserve stock X
Multiple request X
Partial deliveries X
Differences between orders and deliveries X X
Claims and returns X
Suppliers management X
Price update X
Order Tracking X
Technical definitions
Components X
Drawing and codes X
Work Orders
Workers management (cost and times) X X
Split order management X
Work order sh eet info X X
Machinery preparation costs X
Machinery load/work surveillance X
Work load surveillance: X X
Desviation from estimated time and cost X X
Sales
Track orders X
Customer discount management X
Customer credit risk X
Customer orders update management X X
Delivery time surveillance X X
Drawing and Codes, and Price Updates needed complete
customization because they were not standard. That is
also the case of Estimated Time of Delivery, Differences
between Orders and Deliveries, Deviation from estimated
Time and Cost, and others.
In order to keep the case study from becoming too
lengthy, we will focus on only three critical processes:
Purchasing, Proposal Management and Work Orders. A

A. HIDALGO ET AL. 10
greater level of detail is req uired to custo mize the active-
ties that must be developed for these processes.
Each process had to be analyzed at length to ensure its
fit with the standard, and if it did not, it became a new
development project within the implementation. Because
each external link is critical and re presents one of the most
risky aspects, we must be sure to close all sources of the
information flow so that the ERP doesn’t lose control
every time the flow gets out of the system (Figures 8, 9
and 10).
Figure 8. Purchasing flow chart.
Figure 9. Proposal management flow chart.

A. HIDALGO ET AL. 11
Figure 10. Work orders flow chart.
From the analysis of all features included in the pro-
cesses stands out a set of applications that needs to be
studied in detail for customizing according to their own
requirements.
Process for the Management of Proposals
• The management of proposals must be flexible and
take i nto acco unt all versi ons a nd cha nges di scussed
with the client before the order is finalized.
• Regarding estimated delivery time, the ERP must be
able to pr ovide inform ation a bout the work load an d
machinery that will help to analyze future delivery
times. Optionally, the system could give an esti-
mated time.
• Creation and val uati on of non -exist ing p rod uc ts i s a
major development because it collects the special
requirements of future developments or never pro-
duced products that must be budgeted. The most
efficient way to budget non-existing products is to
use the time frame estim ated by the person in charge
of proposal, with advice from the technical de-
partment if necessary, and the costs of the machin-
ery and workers estimated by the ERP. If the pro-
posal is approved by the client, the order must be
redesigned according to this initial information.
Purchasing Process
• The differences between ordered and delivered
quantities must be managed by the system. It must
permit changes and recalculate all costs. Also, any
returns must be included.
• To ensure that price given to the clients fits with the
internal costs, the system should handle this infor-
mation and analyze deviations. When the prices of
spare parts or raw materials are updated, the sys-
tem must be able to recalculate the cost elements
involved.
• Work Orders Proces s
• The most important aspect in this process is to in-
tegrate the management of labour so that this in-
formation can be used as a reference for the rele-
vant indicators such as productivity, absenteeism,
etc., and to narrow the initial time estimation. It
must include a control of deviations from estimated
time and the surveillance of workers.
• This application includes information which is
needed in the report used in the work order.
All the other processes (Sal es and Technical definit ions)

A. HIDALGO ET AL. 12
required for an efficient ERP design also require a set of
applications that need to be customized. In the sales
processes, the major problem reported by workers is the
constant updating of the order by the customers, and its
implications. This suggests the need for constant real-time
information between client sales and manufacturing on
the state of the order. The sales department must also
ensure that tracking the order is always possible.
Finally, the integration of the system with the technical
department requires a specific design of drawings and
code applications.
4.4. Concept Evaluation. Decision Matrix and
Evaluation Criteria
Once all processes have been analyzed in accordance with
the requirements identified in the flow of information, it
will be possible to decide which provider and alternativ e
of ERP will be best. All requirements should be listed on
a spreadsheet with the information collected from the
ERP vendors, the demonstrations, and our general im-
pressions.
The Concept comparison and Evaluation proposed by
Pugh [22] is a well known and referred method for con-
cept selection. It is based in the selection of the evaluation
criteria for the concepts. The spreadsheet with the dif-
ferent main aspects must be organized to collect the im-
pressions from employees in each functional department,
on usability and user friendliness, in addition to techn ical
IT aspects and the costs involved. The decision-m atrix is a
quantitative tech nique used to rank the multi-dimensional
options of an option set and is a form of prioritization
matrix. The basic decision matrix consists of establishing
a set of weighted criteria upon which the potential options
can be analyzed, scored and balanced to obtain a score
ranking. These scores are organized in order to rate each
concept, the higher the so cre the higher its compatibility.
It is a useful iterative method for the comparison of
alternative concepts.
The advantage of this approach to decision-making is
that subjective opinions about alternatives can be made
more objective. Another advantag e of this method is that
sensitivity studies can be performed. The major advantage
of this method is that it facilitates analytical and synthetic
thinking and that new concepts can be generated as a
consequence.
In reference to the firm being analyzed, six principal
aspects were identified: standard compliance, develop-
ments compliance for software adaptations, solutions
offered by the different departments of the firm for criti-
cal issues reports, skills and confident in the demonstra-
tion, technical requirements and fit with the IT depart-
ment, and finally cost involved. The main and secondary
weights were established by the management staff, ac-
cording to the IT department and consultant’s analysis
(Table 3).
4.5. Analytical Hierarchy Process Method (AHP)
An alternative comprehensive method has been proposed
by Saaty [23 ]. It de termines the priority of a set of alter-
natives and the relative i mportance of attributes in a mul-
tiple criteri a decision-m aking pr oblem. It has been used in
various applicati ons such as inform ation syst em select ion,
as well as ERP selection [24].
The basic approach of this method relies on bu ilding a
hierarchy of all objectives derived from the strategic
analysis in order to distinguish fundamental-objectives
from means-objectives. The former being those that de-
cision makers really want to accomplish while the latter
are those which help the fulfillment of other objectives.
Consequently, fundamental-objectives are organized into
a hierarchy which will help the decision makers in order
to identify the relevance of ERP attributes. Thus, the
priority of alternatives can be obtained by aggregating
the weights over the hierarchy. This can speed up the
development of a consensus in relation to the ERP sys-
tem and vendors alternatives [24]. The Figure 11 illus-
trates this selection alternativ e.
In relation to fundamental-objectives, it must be taken
into account the limitations of decision factors and the
changing business environment. Means-objectives are
usually organized into networks relating them (i.e. flexi-
bility and ease of integration may be related with common
program mi ng langua ge, pl at form inde pe nde n ce or syst em
maturity). The set of ERP candidates and vendors can be
shortened by examining means-objectives and also de-
velop detailed attribute specifications to assess the ERP
systems. Alternatives for attributes and inter-attribute
relative relevance can be converted into numerical scales
in order to weight them.
5. Conclusions
For a firm to gain competitive advantage, managers
need to outline a set of objectives. Normally these object-
tives reflect both the business drivers and the market.
Conversely, firms are facing significant challenges in
order to become suppliers of larger customers due to the
excessive costs associated with accessi ng a vast market of
potential customers. For these reasons, it is essential for
companies to adopt an ERP system to maintain control of
their operations and to compete globally. An ERP im-
plementat ion is expe nsive and risky f or all busi nesses, but
it is even more challenging for small businesses, which
have particular characteristics.

A. HIDALGO ET AL. 13
Table 3. Case study of a decision matrix.
Vendor 1 Vendor 2 Vendor 3
Weight
% Mark
(1-10) Mark (1-10) Mark (1-10)
Standard functionality requirements 20%
Standard ERP Compliance 2 0%
Sales compliance 10%
Purchasing compliance 10%
Proposal compliance 10%
Stock management compliance 10%
Work order compliance 20%
Management compliance 20%
Special processes requirement 10%
Sales compliance 15%
Purchasing compliance 15%
Proposal compliance 15%
Stock management compliance 15%
Work order compliance 25%
Management compliance 15%
Special issues reported (solution provided) 20%
Proposal release management 10%
Delivery time info 10%
Non existing produc ts proposal management 20%
Differences between orders and deliveries 10%
Estimated price calculation and controls involved 10%
Workers management 20%
Updating of clients orders 10%
Client order tracking 10%
Demonstration 10%
Knowledge of the product 25%
Demo customiz a tion to company needs 35%
Usability 40%
Technical requirements 10%
Infraestructure 20%
Tools 15%
Database 15%
Integration 20%
Reporting 10%
Maintainance difficulty 20%
Pricing 20%
Hardware cost 15%
Software cost 15%
Maintenance cost 20%
Support cost 20%
License cost 15%
Training cost 15%

A. HIDALGO ET AL. 14
Figure 11. ERP selection system based on AHP.
Despite the great potential and popularity, the adoption
and implementation of an ERP is compromised by re-
markable failures. While many studies highlight the ex-
istence of different factors, we argue that the integrated
nature of the ERP, which generally requires an organiza-
tion to adopt standardized business processes reflected in
the design of the software, constitutes a key factor that
can contribute to reducing th ese failures. But the integra-
tion and standardization imposed by most ERP software
may not be suitable for all types of firms. Thus, the fit
between the characteristics of the adopting organization,
and the standardized business process designs embedded

A. HIDALGO ET AL. 15
in the adopted ERP, affects the likelihood of i mplement-
tation success or failure.
Currently, there are a wide variety of ERP solutions and
vendors, and the election of one that fits as closely as
possible with our company’s needs should be a major
issue and a critical decision. In this context, we must
analyze our objectives and the processes involved, and
motivate workers and utilize their knowledge, so as to
provide as much information as possible regarding all the
aspects affected by this change. The methodology de-
veloped represents a managerial strategic approach to
selecting ERP software for a firm intending to realize
products, an d b ri n g t hem to the m arket . It s contribution i s
that decisions on ERP adoption and imple mentatio n in an
enterprise can be made based on multi-criteria factors that
directly affect the processes. One of the most critical steps
of the methodology proposes to identify which processes
fit with a standard flow and which must be customized.
These latter processes require a higher level of detail for
customization in the activ ities that have to be developed.
We conclude that this methodology is systematic, re-
liable, easy to apply, and accessible. It offers a valuable
means of capturing knowledge in a firm since different
people from various departments come together to col-
laborate on strategic issue s concerning t he business model
of the company. Finally, the application of the method-
ology also offers a decision support instrument, and the
final decision can be made by the decision-makers after
the consideration of other economic factors such as
budget constraints.
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