Suzana Daher, Adiel Almeida, Group preference aggregation based on ELECTRE methods for ERP system selection

1. Suzana de França Dantas Daher
Adiel Teixeira de Almeida
Group preference aggregation
based on ELECTRE methods for ERP
system selection

2. Agenda
 Introduction / Motivation
 Model Proposed
 Numerical application
 Final Remarks

3. Motivation
 Enterprise resource planning (ERP) improves
operational efficiency by integrating business
processes and providing better access to
integrated data across the entire enterprise
 Deciding which is the most suitable ERP solution is
often a difficult task for many companies.
 ERP not developed in-house

4. Motivation
 Organizations select and implement ERP systems
so as to obtain a variety of tangible and intangible
benefits and for strategic reasons.
 The evaluation process of ERP systems needs to
take many criteria into account
 organizational factors such as the complexity of the
business;
 dealing with change management,
 cost drivers,
 its functional requirements,
 system flexibility and system scalability,
 external factors

5. Motivation
 There is a strong possibility that in several
organizations, an ERP system will be
selected by a group.
 Multicriteria group decision making involves
individuals who provide their preferences
for a set of alternatives with respect to a
set of attributes
 Diverging opinions may arise

6. Introduction
 This study deals with how support a group
of individuals to achieve a collective
decision when selecting an ERP system.
 The methodology adopted considered that
DMs act in accordance with their own
interests and there is no information about
their relative importance to each other

7. Introduction
 Which decision making method
should be used?
The selection of the most suitable
decision making method should be
based on the preference structures of
the DMs

8. Additive Model
 For instance, an additive model could be
considered, such as in
 Daher, S F D ; Almeida, A T (2012) The Use of Ranking Veto Concept
to Mitigate the Compensatory Effects of Additive Aggregation in Group
Decisions on a Water Utility Automation Investment. Group Decision
and Negotiation Journal, v. 21, p. 185-204.
 In this case the additive model is considered for
 aggregating the multiple criteria, and
 Aggregating the decision makers’ preferences
 A veto concept is applied for the additive
Aggregation of decision makers’ preferences

9. Outranking methods
 An alternative approach is considered in this
work:
 Outranking methods
 Other properties are assumed for the decision
maker preference

10. Outranking methods
 Outranking methods are particulary suitable
for decision-making through the notion of
weak preference and incomparability.
 Outranking relations (S): “at least as good as”
 aSb and not bSa a P b (a is strictly preferred to
b)
 bSa and not aSb b P a (b is strictly preferred to
a)
 aSb and bSa a I b (a is indifferent to b)
 not aSb and not bSa a R b (a is incomparable to
b)

11. Outranking methods
 Construction of an outranking relation is
based on 2 major concepts:
 CONCORDANCE
 Foran outranking aSb to be validated, a
sufficient majority of criteria should be in
favor of the assertion “a is at least as good
as b”.
 NON-DISCORDANCE
 When the concordance condition holds, none
of the criteria in the minority should oppose
too strongly to the assertion aSb.

12. ELECTRE Family methods
 ELECTRE ( Elimination Et Choix Traduisant la
Realité / Elimination and Choice Expressing
the Reality)
 This family seeks to obtain a set of N
alternatives that outrank those which do not
belong to the subset N.
 Choice problematic:
 ELECTRE I, ELECTRE Iv, ELECTRE IS;
 Ranking problematic:
 ELECTRE II, ELECTRE III, ELECTRE IV
 Sorting problematic:
 ELECTRE A, ELECTRE TRI

13. Model Proposed
 Based on a combination of two outranking
methods: ELECTRE II and ELECTRE IV.
 Assumptions:
 The decision problem is well structured
 Prior definition of a set n alternatives
 Prior definition of a set k criteria
 The model is organized in three steps
Alencar, L.H., Almeida, A. T., Morais, D. C.: A Multicriteria Group Decision Model
Aggregating the Preferences of Decision-Makers Based on ELECTRE Methods.
Pesquisa Operacional 30, Issue 3, 687-702 (2010)

14. Model Proposed
Individual ranking of alternatives (ELECTRE II)
Matrix of global evaluation
Group ranking of alternatives (ELECTRE IV)

15. Model Proposed
First step
 ELECTRE II
 Generation of individual rankings of alternatives
 For each Decision Maker:
 Decision Matrix D
 Concordance and discordance indices
 Criteria weights (inter-criteria information)

16. Model Proposed
First step
 A concordance index C(a,b):
 represents the coalition of arguments in favor
of the statement “a is at least as good as b ” or
in other words “a outranks b ” C (a, b) wj
{ j:g j ( a ) g j (b )}
 A discordance index D(a,b) :
 is used to measure the arguments that may
cast some doubt upon the latter statement.
D ( a, b) max {g j (b) g j (a)}
j: g j ( a ) g j ( b )
 No veto condition: g j (a) v( g j (a)) g j (b), j J

17. Model Proposed
First step
 These indices are used to construct two
pre-orders:
 strong outranking relation (a SS b)
 weak outranking relation (a Sw b)
C ( a, b) c
D ( a, b) d
S iff
aS b wj
j: gj ( a ) gj (b )
wj
j:gj ( a ) gj ( b )
C ( a, b) c
D ( a, b) d
aSW b iff wj wj
j: gj ( a ) gj (b ) j: gj ( a ) gj ( b )

18. Model Proposed
Second step
 Obtain a matrix of global evaluation
 Analyst must collect all individual ranking
and compile them in a global evaluation
matrix.
 DMs are considered as criteria and their
rankings correpond to the evaluation of the
alternatives (ranking position of the
alternative)

19. Model Proposed
Third step
 ELECTRE IV
 Obtain a group ranking
 ELECTRE IV is used in cases in which there
is a pseudo-criterion family and its main
feature is the absence of a weighting
related to the relative importance of the
criteria

20. Numerical application
 Fictitious case study: ERP selection for a
Brazilian airlines
 The company has to deal with inefficient
operational procedures and an IT/IS legacy
system.
 In order to improve its competitiveness,
the company launch of several projects
including, an ERP system and the
reengineering of some business processes

21. Numerical application
 Four decision makers:
 the financial manager (DM1)
 the IT/IS manager (DM2)
 the operational manager (DM3)
 the customer relation manager (DM4)
 Analyst should conduct the decision
making process.
 Number of alternatives: 4

22. Numerical application
 Criteria selection
 Based on: ISO/IEC 9126-1
 a standard that addresses quality model
definition and its use as framework for software
evaluation
 Group of criteria:
 functional, portability, maintainability,
efficiency, vendor, cost

23. Numerical application
Criteria adopted
Criteria Criteria group
C1 Completeness Functional
C2 Number of simultaneous users Functional
C3 DBMS Standards Portability
C4 Number of modules Maintainability
C5 Time behavior Efficiency
C6 Length of experience Vendor
C7 License cost Cost
Installation and implementation
C8 Cost
cost

24. Numerical application
 Decision matrix
C1 C2 C3 C4 C5 C6 C7 C8
A1 4 5000 4 8 0.3 4 0.7 1.8
A2 5 3000 5 12 0.6 5 0.5 1.3
A3 3 4500 4 10 0.2 4 0.6 1.7
A4 5 4000 3 5 0.7 5 0.4 2.0
 Concordance and Discordance coefficients
c+ c- d+ d-
DM1 0.8 0.6 0.4 0.5
DM2 0.7 0.5 0.3 0.4
DM3 0.8 0.5 0.3 0.4
DM4 0.9 0.6 0.3 0.5

25. Numerical application
 Criteria weights
C1 C2 C3 C4 C5 C6 C7 C8
DM1 0.175 0.175 0.082 0.221 0.043 0.117 0.093 0.094
DM2 0.081 0.101 0.086 0.333 0.005 0.081 0.188 0.125
DM3 0.102 0.004 0.005 0.200 0.136 0.149 0.370 0.034
DM4 0.035 0.035 0.198 0.167 0.056 0.232 0.211 0.066
 Table of preorders for each DM
Ranking DM1 DM2 DM3 DM4
1st A2 A2 A3,A4 A2
2nd A3 A1 A2 A3
3rd A1 A3 A1 A1,A4
4th A4 A4

26. Numerical application
 Matrix of global evaluation
DM1 DM2 DM3 DM4
A1 2 3 1 1
A2 4 4 2 3
A3 3 2 3 2
A4 1 1 3 1
 Global ranking of alternatives
Ranking Alternatives
1st A2
2nd A1, A3,A4

27. Final remarks
 In general, decisions made in organizations
involve a group of people, from different
departments or sectors
 Analyst should guarantee that client’s interest
are as well represented as possible.
 An approach to support a group of decision
makers to select na ERP system
 Different results could appear if ELECTRE
IV be changed to another method such as
Borda Count or Condorcet.

28. Thank you.
Suzana Daher
Federal University of Pernambuco
Brazil
sfdd@uol.com.br
suzanadaher@gmail.com