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Criteria for selecting ERP Software Vendors

A vendor, or a supplier, is a supply chain management term that means anyone who provides goods or services to a company or individuals i.e. WEB ERA Company is the vendor for panacea ERP software.
According to the 2013 UK ERP selection guide, we will need to assess the vendors who are most appropriate to our organization and what size of resources, geographic coverage and breadth of product rage we expect them to have.

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Criteria for selecting ERP Software Vendors

  1. 1. Criteria for selecting ERP Software Vendor are listed below A vendor, or a supplier, is a supply chain management term that means anyone who provides goods or services to a company or individuals i.e. WEB ERA Company is the vendor for panacea ERP software. According to the 2013 UK ERP selection guide, we will need to assess the vendors who are most appropriate to our organization and what size of resources, geographic coverage and breadth of product rage we expect them to have.  Financial status - They should be financially stable since implementing a business application is never a one-off purchase, it is a relationship.  Methodology - A prospective vendor should have a proven methodology in order to move smoothly from old system to new one.  A prospective vendor should have a through user training approach, people since people are the largest contribution to the success of any software solution.  Stability - each vendor's stability must be assessed. How long have they been in business? How long have they been selling this type of software? When this application was first developed? How many local and inter- national clients do they have for the application?  Professionalism - assess vendors for the professionalism displayed in dealing with the client’s inquiry and in demonstrating their products.  Service level agreement - assess each vendor for the level of future service and support that they offer. Do they provide telephone support at the times you require it? Do they provide online help? What does it cost for the level of service that you require?  Provision of customization - if the application will be customized, each vendor should be assessed for the service they offer in this and costs involved.  Upgrade path - if the application is an entry level system that may be upgraded in future, assess the vendor for the upgrade path offered and cost of these upgrades.  Customer base - how many packages has the vendor sold and who buys them?  The Vendor should have a website with varying degree of detail.  Technical experience  Market position  Good reputation  What deployment options do the vendor offers  Can the vendor’s ERP system take advantage of the expanding delivery models like cloud computing. Critical evaluation of the suitability of open source enterprise wide systems as well as the established propriety industry alternatives. According to Sam Saltis – bwired 2009, the main issues that have been raised surrounding the evaluation include cost, service and support, innovation, usability, and security. We will analyze and evaluate open source and propriety software with reference to these issues.
  2. 2. Cost Open source software is free. This is a huge draw card, and if your in-house capabilities are such that you are able to implement, train and support at little cost to your organization it may be an attractive option. The cost of proprietary software is made up of a base fee for software, integration and services and annual licensing/support fees. This cost may be prohibitive for some; however what the user is paying for is a more customized product like panacea from a trusted brand that includes higher levels of security and functionality, continuous innovation, a greater ability to scale, ongoing training and support and a lower requirement for technical skills. i.e. PANACEA is customized for your according to the modules you purchase for example HR / Payroll and Student fees. (Saltis, 2009) Service and Support Open source software relies on its online community network to deliver support via forums and blogs. While there are massive, loyal and engaged online communities that users can turn to, time-poor consumers of today are familiar with the immediate service and support that enables issues to be resolved in a timely manner, and these communities cannot guarantee the high level of responsive Service is probably the greatest advantage of using proprietary software. Proprietary software providers offer ongoing support to users, a key selling point for users without technical expertise. If the user manual or guide is not enough, or if a user experiences a problem with the software, there is an immediate point of call to turn to for assistance. There is a certain reduction in the risk undertaken with proprietary software because users are working with companies that are viable, and people with intimate knowledge of the products and services being used should any questions arise. For example WEB ERA for have support for PANACEA both calls and onsite. (Saltis, 2009) Innovation Open source software enables innovation by providing users with the freedom and flexibility to adapt the software to suit, without restriction. It is relevant to note that open source software providers generally struggle to attract large scale R&D.
  3. 3. Proprietary software providers do not allow users to view or alter the source code. While this may be viewed as a disadvantage to some, it ensures the Security and reliability of the software. For example WEB ERA offers customized Panacea depending on the models purchased. This innovation comes fully tested, and is available to all users of the software. It does not require investment in R&D or the technical understanding of source code, and assistance with implementation is generally part of the package. (bWired, 2009) Usability Open source software has been highly criticized for its lack of usability, as generally, the technology is not reviewed by usability experts and does not cater to the vast majority of computer users. Proprietary software generally employs expert usability testing, and as the software is normally aimed at a more targeted audience, and therefore more tailored, usability is generally ranked quite high. i.e. panacea is intended for schools and was tested in that environment for usability. Security Open source software is often viewed as having security issues. New data from Forrester Research has shown that 58% of IT Executives and technology decision makers in large companies are concerned about the security of open source software. Proprietary software is viewed as more secure because it is developed in a controlled environment by a concentrated team with a common direction. Conclusion When deciding between open source or closed source (proprietary) software, it is critical to first consider the organization’s business internal (resources and capabilities) and external (stable or evolving) environment, and the level of risk the organization is willing to take. The aforementioned issues can then be used as a guide to make an informed decision between the two. (Saltis, 2009)
  4. 4. Question 2: Analyse the limitations, advantages and disadvantages of the ERP packages you have evaluated. Limitations of ERP Extensive training sessions to the staff; implementing an ERP package, for instance Library management, an organization will have to incur extra costs apart from installation charges but will have to train the library staffs on how to use such package let alone that, the organization will also have to train the students or end users of the library, mainly to make sure students will be able to access and locate all the necessary and helpful details. Violation of some organizational policies; ever since ERP are customized in accordance of the organizational needs, some customizations may lead to extensive transparency in an organization, which might violate some of the policies, for instance in students information system, showing the attendance or coursework can result to alternating of such information by the students themselves by hacking into the system. A longer time in implementing an ERP project; some organizations are very complex and need more than one module in their ERP, implementing such phases usually consume a lot of time not only that but also setting up a few modules will also take time to for training the staff and the system administrators. Advantages of ERP packages  Better organizational control, especially in large companies, where the volume of information is more than in a small company.  Duplication of information is avoided; Modules access same data from the central database, avoids multiple data input and update operations. (Rashid, Hossain & Patrick, 2002)  Improved communication, both internally and externally, with a module such as student information system, it is easier to communicate with students even if their outside the campus or on holidays.  Improved decision-making process within an organization; it is easier for the organization to make decisions for instance in an educational institute if the
  5. 5. students are qualifying for continuation of studies in given semesters, or even in selecting the best student and awarding them presents.  Time efficiency; an educational institution using students information system module can easily track the students attendance days, hand in assignments and submission of assignments. Disadvantages of ERP packages  The high cost of implementation and maintenance. (High initial investment)  Adaptation to the hardware in an organization.  It is necessary to train all employees in the organization so that the package is used efficiently, with a beneficial output.  Integration with other applications in the enterprise needed.  Inflexibility of the system, because this is a generic system.  There are few experts in this system.  If the system is not applied correctly, it can be very detrimental to the company. Identify what opportunities SOA & SaaS technologies have provided for Higher Education Institutions in Tanzania who traditionally have not considered entering the ERP market. SOA will benefit higher education institutes; since SOA, will enable such institutions flexibility by integrating various departments and being enabling data agility, which is to be easily accessed through appropriate departments, and hence enable reaching of the institutes goal, thus technology, Departmental, and Administrative staff must work together to clearly articulate services and how they may be offered to end users. Reduce the work load for educational institutions to manage various number of software across different departments; if these applications are reconfigured into a services which are operated on the same setting, it will enable such institutions to become more cost efficient ever since of operating from the same setting and using of a single software for versatile tasks. Reducing of borders by enabling easy sharing of information; higher learning institutions have different campuses which are separated geographically, it may be a tedious task to enable sharing of information cutting across all campuses and to be time efficient & cost efficient as when the notification is to be received. SOA accommodates changes to be made in the information technology infrastructure; in configuring SOA it’s not mandatory to install the whole package at once, two modules (service operations), might be installed perhaps the accounting and human resource modules, now when the institute will be ready to make other changes on SOA it will be affordable and sustained easily.
  6. 6. Minimizing manual data entry involvements, this will lead to data integrity; “minimizing manual involvements for system administration. With their value demonstrated since the emergence of on demand environments, self-managing autonomic capabilities have been used in support of strategic innovation, and are constantly maturing and evolving to readily deliver value in the context of the demands of SOA-based settings”. (IBM, 2006) Question 3 Synthesise and justify a practical implementation strategy for the enterprise wide system package recommended. Ensure you include a strategy to overcome the problems often associated with the implementation of ERP software projects. Base your answer on appropriate theory and case studies/academic articles found in academic literature. A higher education learning institution which uses a traditional system in Tanzania is looking forward to implement an ERP project, basing on panacea online educational solutions; we will start with an implementation strategy of phased rollout or incremental strategy. Incremental strategy “In phased strategy the elements or modules of the ERP system are introduced slowly in a well planned sequence. The legacy systems are replaced gradually with the new one. In the phased approach, the organization first focuses on the most important business requirements and the initial implementations are made only to a limited number of organizational units. Once first transition is successfully achieved, and then a little less important or complex functions are added in the next phase to include additional organizational units.” (Leon, 2009) The incremental strategy will enable the higher learning institution, to be more time efficient in processing admission of students, performing the educational reviews of students from one semester to another and also reviewing the phases of various modules and monitor well the feedback process which will help in successfully implementation of further modules. Phased rollout by module In this Strategy, ERP modules are implemented one at a time. It begins with core business functions those necessary for daily operations and then more modules and functionality are added with each incremental phase. This is most common approach used by organizations. (Neal, softwareadvice 2010)
  7. 7. By using this technique the high learning institution will implement an ERP using two modules. 1. Admission management system. ( Panacea, 2015) 2. Student’s information system. (Panacea, 2015) Admission management system This module will consist of admission & registration details, students detail & attendance, fees detail, it will allow user to upload annual syllabus and update tentative dates for syllabus completion. Student’s information system This module consist of students personal details, exam schedule, internal & external marks, news & notice, it will allow the users to download the syllabus, course material, mark sheet, certificates and admit cards. A strategy to overcome the problems often associated with the implementation of ERP software projects Change management strategy: Improvement strategies, such as ERP implementation, commonly involve change. Hence, responsiveness to internal customers is critical for an organization to avoid the difficulties associated with this change. (Aladwani, 2001) To assist top management with the complex organizational problem of workers' resistance to ERP implementation, Aladwani, suggests an integrated, process- oriented conceptual framework consisting of three phases (Figure 1): knowledge formulation, strategy implementation, and status evaluation. (Aladwani, 2001)
  8. 8. Figure 1 suggested framework of managing change associated with ERP Source: (Aladwani, 2001) Knowledge formulation phase The first step in effectively managing change introduced by IT is to identify and evaluate the attitudes of individual users and influential groups, this analysis should address such questions as:  Who are the resisting individuals and/or groups?  What are their needs?  What beliefs and values do they have?  What are their interests? The answers to these fundamental questions may offer a good starting point in determining the sources of employees' resistance to the ERP system. (Aladwani, 2001) Strategy implementation phase Management can use the knowledge regarding potential users from the previous stage to set up strategies that can best overcome users' resistance to the ERP system, and to convince as many users as possible to adopt it (Aladwani, 1998). If this is the case, it is more appropriate to find an action sheet for implementing the selected strategies. The three-level adoption process (think-feel-do) provides a good framework for describing this phase. (Aladwani, 2001) In an attempt to change the attitudes of potential users of ERP, management must first try to affect the cognitive component of users' attitudes. A major strategy for
  9. 9. achieving this goal is communication. One effective communication strategy is to inform potential users of the benefits of ERP. Status evaluation phase The process of monitoring and evaluating change management strategies for ERP implementation is the last component of the suggested framework. Besides having a performance measurement system to ensure that the desired business outcomes were achieved. (Aladwani, 2001) To overcome users' resistance to change, top management has to:  study the structure and needs of the users and the causes of potential resistance among them;  deal with the situation by using the appropriate strategies and techniques in order to introduce ERP successfully; and  Evaluate the status of change management efforts.
  10. 10. References IBM, Autonomic computing: strengthening manageability for SOA implementations, December 2006. 1st edition. Rashid M, Hossain L, Patrick J, the Evolution of ERP Systems: (2002), Idea Group Publishing. A Leon (2009), Enterprise Resource Planning, Tata McGraw-Hill, India. 1031101/ Neal H. Panacea 2015, Adel M. Aladwani, (2001),"Change management strategies for successful ERP implementation", Business Process Management Journal, Vol. 7 Iss 3 pp. 266 - 275