Introduction

Enterprise Resource Planning (ERP) systems offer great promise to businesses wanting to

consolidate and integrate the many elements that comprise business practice. Essentially, they

are online, interactive information systems used for enterprise integration; they support cross-

functional processes using a common database that can integrate across multiple functional areas

by focusing on processes, rather than individual functions. Organizations that invest in new ERP

software packages are making a big commitment in terms of both time and money, especially

given the complexity of such systems and the risk that their implementation will bring

unforeseen problems. This paper looks at the process of planning in the acquisition of ERP

systems, IN KCA University.

Request for Proposal

A request for proposal (RFP) is a document that an organization posts to elicit bids from

potential vendors for a desired IT solution. The RFP specifies what the customer is looking for

and establishes evaluation criteria for assessing proposals. An RFP generally includes

background on the issuing organization and its lines of business, a set of specifications that

describe the sought-after solution, and evaluation criteria that disclose how proposals will be

graded. RFPs may also include a statement of work, which describes the tasks to be performed

by the winning bidder and a timeline for providing deliverables. An RFP may be issued for a

number of reasons. In some cases, the complexity of an IT project calls for a formal RFP. An

organization can benefit from multiple bidders and perspectives when seeking an integrated

solution calling for a mix of technologies, vendors and potential configurations. A business

moving from a paper-based system to a computer-based system, for example, might request
proposals for all the hardware, software, and user training required to establish and integrate the

new system into the organization. A simple hardware upgrade, in contrast, may only involve

issuing a request for quotation to a single vendor.

Acquisition of ERP Systems, IN KCA University

ERP is a package software solution that addresses the enterprise needs of an organization by

tightly integrating the various functions of an organization using a process view of the

organization. It is a package software and not a custom made software for a specific firm. It

gives a company an integrated real-time view of its core business processes. ERP integrates the

functional modules tightly. It is not merely the import and export of data across the functional

modules. It integrates all data and processes of an organization into a unified system. A typical

ERP system will use multiple components of computer software and hardware to achieve the

integration. The integration ensures that the logic of a process that cuts across the function is

captured genuinely. This in turn implies that data once entered in any of the functional modules

is made available to every other module that needs this data. This leads to significant

improvements by way of improved consistency and integrity of data.

The Acquisition Process

Activity 1: acquisition team formation

During the earliest stages of the planning process (the pre-planning process stage), such a

combination of complementary expertise from consultants and end users would be valuable. In

all the cases, the acquisition team is responsible for the analysis of requirements, documentation

of the acquisition process, solution design, and development of procedures for the evaluation and

selection of the technological solution.

The multi-disciplinary and inter-disciplinary nature of the team is such that each department

and/or functional area plays a role and that role is assumed by the team member(s) from those

areas. Even if the formation of the acquisition team is a process of delegation, each component

stays as a stakeholder in the project. The steering committee, in all the cases, is made up of

senior-level individuals from all business areas of the organization that will be affected by, or

will share in the development of, the final system solution.

In consultation with the steering committee, it is very important for the project manager to be

able to pre-determine the required skill levels for the acquisition team. By assessing the existing

skill levels of the acquisition team members, the gap between the required and existing skills can

be identified. Where gaps exist in the team members’ skill sets, competence and capabilities can

be improved by bringing in external consultants. In delegating, it is important to ensure the team

members have sufficient time, and commitment for the job, and that they are clear about what

they have to do. Once the acquisition team has been formed, it has to report on the progress of

the acquisition project. In so doing, the project manager will be expected to supply periodic

reports to the steering committee to ensure that management is fully aware of the project’s status.

Definition of requirements

The significant issue in ERP acquisition is to define requirements at both the user and the

organisational level. The problems with the legacy system and reasons for moving to an ERP

system need to be clearly stated in assessing the status of the existing IT environment. The focus

of the proposed system needs to be established, based on this assessment. In the process of

defining the requirements, opportunities and benefits such as achieving competitive advantage,

reducing costs and so on may also be established.

It is also important at this stage to identify the ways in which ERP-enabled business benefits

such as improved customer services, cost reduction etc will be achieved as a result of the new

system. Future technological requirements for the organization, in terms of IT connectivity

and IT compatibility, also need to be part of technology planning. Furthermore, users need to be

involved when their current and future information requirements are established. In defining the

new set of information requirements for the ERP software, the existing requirements must also,

as mentioned above, be taken into consideration. These existing requirements may or may not be

endorsed by the acquisition team. However, the steering committee has to compare the new

requirements with the existing requirements and make sure the management is aware of the

discrepancies (if any) and their magnitude.

Establishment of evaluation and selection criteria

After deciding to move to an ERP system, the process of selecting the right vendor gains

importance because ERP vendor selection involves more than simply interviewing a list of

suppliers. Besides providing long-term support and an ongoing business relationship, the ERP

vendor should provide the best possible solution for the requirements of the individual users and

the organisation. If the right ERP vendor is selected, the solution could provide a competitive

advantage.

Since the acquisition team is cross-functional, it could be encouraged to generate a set of criteria

to evaluate the functional areas covered by the proposed system. These criteria would act as a

check- list against which to evaluate the proposed system. The project manager could develop

criteria for overall affordability in terms of costs and benefits.

Those members of the acquisition team with external contacts (say marketing) could develop

criteria to assess the market position of the vendor. The acquisition team consultants, depending

on their experiences, could develop industry-specific and module-specific criteria.

Marketplace analysis

The case-studied organisations wanted to find out who were the major players in the marketplace

for the technological solution they were seeking. This analysis played an important role in

reducing the list of potential candidates. Once the information was gathered, the acquisition

teams were in a position to do a preliminary review of each technology’s capabilities against

their defined requirements (the functional capabilities required of the software,) using the

evaluation and selection criteria they had defined previously. Those products that were found, in

the initial review, to lack any of the essential capabilities could be eliminated from further

consideration.

To reduce the list even further, organizations could also make use of customer referrals, site

visits, financial reports and other vendor and product evaluation criteria. To produce a short

long-list of vendors, it is useful to develop a knowledge base of vendors and their products. This

knowledge base would need to be plugged into the IT industry, and could be used for assessing

and analyzing the ERP vendors with a view to developing long-term partnerships. It would be

valuable at every stage of evaluation.

Choice of acquisition strategy

The essence of strategy is the deliberate decision to perform. Hence, each of the organizations

developed strategies that would help it to reduce the risks and uncertainties associated with this

process.
Since billions of dollars in revenue are at stake for the vendors, the videotaped recordings served

as ‘accurate memory’ for the acquisition team to return to and review at their leisure, to confirm

what was presented or correct a mis-association. They could also have been viewed by users or

others who could not be present at the demonstrations. However, the vendor’s presentation skill

alone should not be a decision-driver.

Anticipation of acquisition issues

Anticipation of issues is the first step in error management and helps to avoid any kind of unex-

pected outcome that could turn into a crisis. This advance planning establishes a radar system

to help management anticipate and prepare for potential problems in ERP acquisition.

Such a plan could anticipate changes in ERP technology trends, evaluate their potential, and

create effective plans to manage their rapid evolution. That way, the acquisition process would

avoid any errors or problems, and the potential problems could be addressed beforehand. The

issues may be anticipated in several ways: for example, by running acquisition team sessions

devoted to particular issues, by predicting likely threats, and/or by exploring ways for internal

ad- adjustments to adapt to a changing world of ERP systems.

Acquisition issues may also be identified from other sources, including periodicals, media,

meetings, and networks of opinion leaders. The acquisition team needs to establish priorities by

categorizing the issues from most basic to most elaborate ones. Projecting changes in each

category of issues and the trends affecting ERP acquisition would be helpful, as a means of

identifying those issues likely to bring positive or negative out- comes. The likely implications in

each case could be visualized by creating possible scenarios involving the anticipated issues.
The steering committee and the project manager should enable the acquisition team to advance

their position on the anticipated issues.

Conclusion

This paper has presented another perspective on planning as it pertains to the acquisition life

cycle for ERP software in KCA University. It identifies a blueprint of specific planning activities

for ERP acquisition. KCA University could use these activities to highlight all the issues

involved in making a decision to acquire an appropriate ERP solution. Six distinct activities were

found: project team formation, definition of requirements, establishment of evaluation and

selection criteria, marketplace analysis, choice of acquisition strategies, and anticipation of

acquisition issues.
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