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How do Chinese SMEs select their ERP packages? A case study of a
Chinese manufacturing Enterprise
A study submitted in partial fulfillment
of the requirements for the degree of
Master of Science in Information Systems
at
THE UNIVERSITY OF SHEFFIELD
by
Haibing Li
September 2012
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ACKNOWLEDGEMENTS
First of all, I would like to give my extreme appreciation to my supervisor, Dr. Peng (Alex)
Guochao who has given me guidance and support from the beginning to end of this
dissertation. Without his helps, it is impossible to finish this dissertation in a right way.
Secondly, I would like to thank my parents to offer the opportunities for conducting my
MSc courses and always give me selfless support when I writing this dissertation.
Also, I would like to thank Zhenxing Machinery company in China which provide me the
opportunity to access and conduct the case study.
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Abstract
According to the review of existing literatures, it emerged that there is a gap between the
western and Chinese countries about the researches of ERP selection.The research presented
in this study aims at exploring, identifying and investigating decision making process and
evaluation criteria used in the Chinese SMEs.
This research discovers a large number of existing literatures about decision making process
and evaluation factors of ERP packages selection. It develop an adjust decision making process
for aiding in the Chinese SMEs select ERP packages after the literature review. Moreover, in
order to explore and identify the evaluation criteria used in ERP packages selection in China, a
deductive research design base on the case study of a Chinese small manufacturing company
was introduced. After the literature review, a summary of evaluation factors was identified and
classified into four categories: organizational factors, project implementation factors, system
factors as well as vendor factors. The interview design was based on these evaluation factors
and six interviews were conducted with internal organizations and external entities (IT
specialist).
The case study shows that Chinese SMEs face with some challenges during the ERP packages
selection. The limitation of available human and finical resource, the attitudes from top
management, as well as the lacks of IT experts and experiences may affect their ERP packages
evaluation. As a result, they laid high stress on the costs of ERP packages, system reliability
and the qualities of after sales services. In addition, an empirical model of ERP selection
criteria was generated which involves 11 evaluation factors. It could promote the
understanding between ERP vendors and enterprises and thus develop most suitable ERP
packages for Chinese SMEs.
Finally, it presented the limitation of this research and the trend of further research about ERP
selection in Chinese SMEs.
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List of Contents 1. Introduction ............................................................................................................................... 1
1.1 Context of the Study ....................................................................................................... 1
1.2 Research Question .......................................................................................................... 2
1.3 Research aims and objectives ......................................................................................... 3
1.4 Structure of the Dissertation .......................................................................................... 3
2. Literature Review ...................................................................................................................... 4
2.1 Introduction ..................................................................................................................... 4
2.2 ERP system ....................................................................................................................... 5
2.2.1 What is an ERP system? ....................................................................................... 5
2.2.2 Benefits of implementing an ERP system for enterprises .................................. 6
2.3 Decision making process for ERP selection in SMEs ...................................................... 7
2.3.1 Decision making process purposed by other authors ......................................... 7
2.3.2 The adjusted decision making process for SMEs ................................................ 9
2.4 Evaluation factors affecting ERP selection ................................................................... 10
2.4.1 Evaluation criteria of ERP selection ................................................................... 11
2.4.2 Differences between SMEs and large enterprise in ERP selection ................... 11
2.4.3 Proposed criteria for ERP selection in SME ....................................................... 12
3. Research Methodology ........................................................................................................... 17
3.1 Research Approach........................................................................................................ 17
3.2 Research Design ............................................................................................................ 19
3.2.1 Stage 1: Literature review .................................................................................. 19
3.2.2 Stage 2: case study ............................................................................................. 21
3.2.3 Stage 3: Analyze and evaluate the interview data for examining the model .. 22
3. 3 Data collection .............................................................................................................. 22
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3.3.1 Interviews ........................................................................................................... 23
3.3.2 Interview design ................................................................................................. 23
3.3.3 Participants of Interview .................................................................................... 24
3.3.4 Data Collection by Interview ............................................................................. 24
3. 4 Data Analysis ................................................................................................................ 25
4. Data Analysis and Findings ..................................................................................................... 29
4.1 Organizational factors ................................................................................................... 29
4.2 Project implementation factors .................................................................................... 31
4.3 System factors ............................................................................................................... 33
4.4 Vendor factors ............................................................................................................... 35
4.5 External factors ............................................................................................................. 37
4.6 Further Discussion for findings ..................................................................................... 38
4.7 Summary ........................................................................................................................ 39
5. Conclusion and Discussion ...................................................................................................... 41
5.1 Conclusion ..................................................................................................................... 41
5.2 Limitation ....................................................................................................................... 43
5.3 Further Research ........................................................................................................... 43
References ................................................................................................................................... 44
Appendix I interview script ......................................................................................................... 50
Interview to CEO .................................................................................................................. 50
Interview to IT manager ...................................................................................................... 51
Interviews to end-users (sales department, accounting department, manufacturing
department) ........................................................................................................................ 52
Interview to IT specialist ..................................................................................................... 53
Appendix II Final Coding Scheme with themes .......................................................................... 54
Appendix III Example of Concept Map for project implementation factors ............................. 56
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List of Figures
Figure 1: the deductive research process (Hayes, 2000) 17
Figure 2: the inductive research process (Hayes, 2000) 17
Figure 3: the framework of this research 19
Figure 4: The Interview Participants 23
Figure 5: Empirical model of ERP selection criteria 37
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1. Introduction
1.1 Context of the Study
Since the Chinese economic reform, China has remained a great economic growth at over 9%
per year(Keng, 2006). Many global enterprises built up their manufacturing factories due to
the cheap labors and nature resources. The domestic companies faced with continuous
increasing fierce competition and pressures from foreign enterprises. In order to increase
their competitiveness and reducing business costs, both local and global enterprises are
willing to purchase and introduce ERP packages (Huang and Palvia, 2001). According to
International Data Corporation (IDC), the ERP market in China ranges from $78.4 million in
1997 to $243 million in 2002 (Xue et al., 2005). As predicted by market analysts, the sales
raised annually by 25% and reach $652.8 million in 2006 (Xue et al., 2005).
Enterprise Resource Planning (ERP) system is an integrated computing system to automate
various functional areas together and support the business management of companies. It
may include some or all sub functions such as finance/accounting, manufacturing, human
resource management, inventory management, etc (Singla, 2008). With the
implementation of ERP systems, the enterprises could observably decrease their cost,
enhance efficiency and performance, as well as design and optimize business process.
In order to reach huge potential customers, some global vendors had already accessed the
Chinese ERP market, such as SAP, Oracle, and PeopleSoft. The domestic and foreign ERP
vendors are competing fierily, whereas the markets are inclined to saturation (Liang et al.,
2004). Nowadays, most of big and large Chinese enterprises had install ERP systems.
However, according to incomplete statistics, there are 1,323,000(43.7% of the number of
China’s corporations) private enterprises and only 3.8 percent of the Chinese SMEs are
using ERP systems (Martinsons, 2004). As a result of positive influences from ERP systems,
there are many SMEs are trying to implement ERP in China. It means that the ERP vendors
which could reach these potential customers will achieve amounts of competitive
superiority from now.
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Although successful ERP projects are undoubtedly publicized, it is a high interests practice
along with amazing risks. It has been highlighted that the successful ERP project rate in
China is as low as 10 percent (Motwani et al., 2002). Moreover, some researchers stressed
that “ERP implementation projects in average are 178% over budget, take 2.5 times as long
as intended, and deliver only 30% of promised benefits” (Zhang et al., 2005). Professional
organizations, such as ERP vendors and research institutes, are expected to evaluate the
reasons of ERP project failure. Base on the process of ERP projects (before, during and after
implementing ERP system), many frameworks have been developed to identify critical
successful factors (Huang and Palvia, 2001). With these successful practices, the
enterprises and ERP vendors can conduct ERP projects in a right direction. For Chinese
SMEs, they have no or few experiences on implementing and using ERP systems. As a
consequence, the correct selection of ERP vendors and systems in the first stage of ERP
project contributes to the success of ERP project.
In order to promote the understanding of ERP selection in Chinese context, this paper will
deploy the research aiming to evaluate how Chinese SMEs select their ERP packages by
case study of a Chinese small manufacturing Enterprise.
1.2 Research Question
In this research, the term of “ERP projects” is defined as the processes cover all the
lifecycle of ERP systems. It consists of the selection of ERP packages, ERP systems
implementation, as well as ERP post-implementation (Wei and Wang, 2004). In contrast,
“ERP implementation” is defined as the process focus on the ERP systems implementation.
ERP selection is a multiple criteria decision-making process. In order to select suitable ERP
packages, the enterprises must plan the project, search the relevant information about ERP
packages, evaluate the candidates, and make a final decision. As a result, the main research
question, as showed in the title, is: “How do Chinese SMEs select their ERP packages?” It
should be divided into two sub questions:
What are the decision making processes used by Chinese SMEs for ERP selection?
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What evaluation criteria Chinese SMEs used in ERP selection?
1.3 Research aims and objectives
The overall aim of this research is to investigate how Chinese SMEs select ERP packages.
In order to achieve the aim stated above the following research objectives are developed
to identify the appropriate decision making process for Chinese SMEs, as well as propose
suitable evaluation criteria for Chinese SMEs select ERP packages:
1. To conduct an in-depth literature review concerning the decision making process for
SMEs selecting ERP Systems.
2. To conduct an in-depth literature review on evaluation criteria used in ERP selection for
SMEs.
3. To investigate processes for Chinese SMEs to make decision about ERP selection.
4. To explore what the evaluation criteria Chinese SMEs used in ERP packages evaluation.
1.4 Structure of the Dissertation
Chapter 1: It introduces the context of the ERP implementation in China. In addition, it
presents the research question, as well as the aims and objectives of this research.
Chapter 2: It investigates three aspects of literatures relevant with research questions,
including the definition and benefits of enterprise resources planning (ERP) systems, the
decision making process of enterprises select ERP packages, as well as evaluation criteria
used in existing literatures.
Chapter 3: The methodology of this research were designed and discussed in this chapter,
such as research approaches, research design, data collection method, and data analysis
method.
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Chapter 4: The findings of interviews that in-depth discussed about what and why the
evaluation criteria used in Chinese SMEs. At end, a summary of this chapter are given.
Chapter 5: It concludes the major findings of this study and presents the limitation and the
further recommendations for this research.
2. Literature Review
2.1 Introduction
Enterprise Resource Planning (ERP) system is an integrated computing system to automate
various functional areas together and support the management of companies. Owing to
the significant influences on organizational performances, many enterprises are willing to
implement ERP system. Nevertheless, it has been highlighted that the successful ERP
project rate in China is as low as 10 percent (Motwani et al., 2002). The conclusive reason
of failure is an incorrect selection of ERP vendors and systems in the first stage of ERP
project. As a result, the researches about ERP selection are essential for enhancing the ERP
success in Chinese context.
There is a gap from development and developing countries in the degree of ERP system
implementation. Most western enterprises had already implemented or try to implement
ERP systems while enterprises from developing countries begin to apply ERP systems (Al-
Mashari et al., 2006). Consequently, most studies about ERP selection in western countries
are old. Some researches currently exists focus on the phase of ERP selection, they used
technical approach to analyze the critical factors affecting ERP systems, such as AHP, fuzzy
AHP, ANP (Wei et al., 2005)(Cebeci, 2009). It is difficult to introduce these approaches to
different countries with dramatically complex economic and culture backgrounds. Although
few researchers from developing countries recognize the weakness of current studies, they
evaluate the decision making process of ERP selection and evaluation criteria in a separate
way. It is not clearly shows the evaluation criteria used in current Chinese SMEs. The
enterprises and ERP vendors cannot apply them into practicalities. Consequently, this
research purposes to integrate these two aspects together and examine how Chinese SMEs
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select their ERP packages. It consists of the establishment of decision making process of
ERP selection and the evaluation criteria of ERP selection used in Chinese SMEs. It will
promote the understanding between ERP vendors and SMEs so that vendors could adjust
their ERP packages for SMEs.
2.2 ERP system
Enterprise System was previously defined as Enterprise Resource Planning (ERP) application
(Davenport, 1998). ERP system is increasingly important in current business due to its ability to
manage business process and reduce operational costs (Holland and Light, 1999). Many
researchers and experts conducted diverse researches in order to enhance the success
rate of implementing ERP system (Abdinnour-Helm et al., 2003) (Bingi et al., 1999) (Peng and
Nunes, 2009). It covers the whole ERP project life cycle: pre-implementation, implementation
and post-implementation. However, there is no broadly agreed definition for ERP system. The
published literatures define the term of ERP system from different perspectives.
2.2.1 What is an ERP system?
In the early stage, the ERP system was defined as database based computer software
packages integrated various functional areas, such as financial, sales order management,
accounting, inventory and human resources (Caldas, 2003). The enterprises would employ
one or more functionalities in view of their scale and business strategy (Van Everdingen et
al., 2000). Tadjer(1998) also pointed out that the ERP is “One database, one applications
and a unified interface across the entire enterprise”. A centralized database promotes
information transfer and sharing across different departments in an organization (Jenson
and Johnson, 2001). As a result, potentially, the enterprises could increase their
competitive advantages and organizational performances (Davenport, 2000). In addition,
by considered as a computer software packages, ERP system has two characteristic:
standard and configurable (Kumar and van Hillegersberg, 2000). The ERP vendors offer ERP
packages that contain a variety of functionalities. These functionalities are designed to
support the management of specific industries (eg. financial industry, manufacturing
industry, health care industry). Furthermore, the ERP system is configurable therefore it
could cater different business requirements from enterprises (Luo and Strong, 2004). They
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deploy particular functionalities through setting the configuration parameters or
customization (if need).
Some authors give their definitions only emphasize on particular part of the ERP system.
Chung and Snyder (2000) assert that the ERP system is supply chain management software
developed for manufacturing industry. And Shehab et al (2004) stress on the influences of
central database. These viewpoints only involve few parts of ERP system.
Along with the enhancement of computer hardware and software, many new sub-systems
have evolved into ERP packages, including Customer Relationship Management (CRM),
Business Intelligence, Workflow, and Content Management etc (Esteves and Pastor, 1999).
The ERP system was considered not only computer software, but also management tools
for enterprises. From the perspective of Spathis and Constantinides (2003), the ERP
systems tends to be a effective management tool for planning and controlling all resources
of enterprise. It aims to deal with an organization’s business tasks and promote integrated
and real-time planning, production, and customer response (Spathis and Constantinides,
2003).
In summary, the ERP systems is a standard and customizable software package integrate
various functional areas which strives to deal with information and information-based
business process (Lech, 2012). On the other hand, ERP system is integrated with a single
relational database which could confirm the consistency of all information (Muscatello et
al., 2003).
2.2.2 Benefits of implementing an ERP system for enterprises
ERP project is a high benefit practice along with amazing risks. Nevertheless, many
enterprises spend hundreds of thousands and even millions of dollars purchasing and
implementing ERP systems. They believed that an ERP solution can bring substantial
tangible and intangible benefits to organizations (Jacobs and Whybark, 2000). It is crucial to
understand what benefits ERP system can actually provide. And the enterprises can make a
correct decision whether implementing ERP system.
Numbers of studies related to information research have already stated the benefits
realized from implementing ERP systems. The mostly quoted ones among literatures are
cost reduction, productivity and efficiency improvement, as well as higher performance
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capability (Gattiker and Goodhue, 2004)(Murphy and Simon, 2002)(Gefen and Ragowsky,
2005). With the business process reengineer during ERP system implementation, some
redundant processes are removed and therefore obviously decrease the cost and time
consuming (Shang and Seddon, 2000). There is evidence that the by implementing the ERP
system the enterprise’s productivity and efficiency higher than the enterprise with non ERP
system (Huang and Palvia, 2001). Another benefit from business process reengineer is
reducing inventory cost. Instead of storing many products and materials in store,
enterprises control and place their re-supply order in a real-time (Gupta, 2000).
Computer-based technology has become an integral part of current business. Many
enterprises have purchased or developed several information systems in order to support
their business process (Van Everdingen et al., 2000). For example, the account department
is likely to own an accounting packages while sales office has a customer relationships
management system. But many legacy systems are separate and it leads to inefficiency and
confusion of enterprises’ business. The ERP systems come with a single database means
that the data can be only modified by permitted people and share with others (Muscatello
et al., 2003). It highly reduced the possibility of acquiring incorrect data. And, Ross and
Vitale (2000) indicated that the well-structured information is quite useful for decision
making.
Shang and Seddon (1999) has proven these cited benefits, and developed a comprehensive
framework for classifying the benefits. These influences are divided into operational,
managerial, Strategic, IT infrastructure and organizational relating benefits. Furthermore,
Olhager and Selldin (2003) listed 10 benefits through the survey of Swedish manufacturing
firms . The most notable benefit in their research is the enhancement of information
sharing across different department in an enterprise.
2.3 Decision making process for ERP selection in SMEs
A normal ERP project contains four sub-processes: “selecting ERP software system and
vendor, implementing ERP systems, managing business processes change (BPC), and
examining the practicality of the system” (Wei et al., 2005). A successful ERP selection is an
effective way to improve the success rate of remaining processes.
2.3.1 Decision making process purposed by other authors
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Diverse authors have proposed their researches in relation to ERP selection. Few authors
have investigated the decision making process of ERP selection. Verville and Halingten
(2003) suggested a high-level ERP acquisition process model which consists of six
distinctive processes: planning, information search, selection, evaluation. Followed the
standard selection process identified by Verville and Halingten (2003), Deep et al (2008)
presented a structured ERP software selection process. There are four sub-processes have
been identified: plan, identify, evaluate, select and each sub-process has its detailed tasks
and activities.
Further, Lien and Chan (2007) developed a selection model integrated with FAHP methods.
It contains several phases: “organize the project team, Identify the business model and
define the particular need of project, searching the feasible alternative ERP systems,
selection criteria extraction of ERP system, hierarchy establishment of ERP selection criteria,
apply FAHP method to assess the alternative ERP systems, acquire the most suitable ERP
system”(Lien & Chan, 2007). In Stefanou's (2000) research, business vision is determined as
the starting point of ERP project implementation. The main purposes of second phase are
gathering relevant information about business requirements and analyzing the gaps from
current system to desire systems. The last phase is to evaluate and select appropriate
vendor and product to fulfill business needs.
In addition, in order to evaluate the ERP packages, some evaluation methods are presented
by the researches. They collected relevant information about target ERP system and then
they make an evaluation standard for evaluating the ERP packages. These methods contain
scoring, ranking, mathematical optimization, and multi-criteria decision (Huang, 2008). In
Wei and Wang's (2004) study, they presented an AHP-based approach for ERP selection. It
started from “constitutes an ERP project team”. The task of project team is to collect all
relevant information about ERP vendors and systems. By identifying the project
characteristics, the project team could establish a consistent evaluation standard for final
evaluation. However, it is difficult to introduce this technical approach into a real-world
due to the complexity of this method. Buss(1983) suggested an alternative approach with
ranking technique. This method is intuitive and it did not solve the issue of resource
feasibility. The multiple-criterion scoring method is frequently used in ERP packages
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evaluation in SMEs (Karsak and Ö zogul, 2009). The main issue is to determine suitable
evaluation criteria for SMEs.
Based on the above findings, an adjusted decision making processes has been developed
for supporting ERP selection in SMEs.
2.3.2 The adjusted decision making process for SMEs
Planning
The main purpose of this phase is to define the organizational needs of ERP system. In
order to collect relevant information for decision making, a project team would be
established which includes across-departments users, decision makers and domain experts
(Holland and Light, 1999). The support from top managements is dramatically important to
the success of ERP implementation (Ptak and Schragenheim, 2004). Its responsibility is to
conduct a market research initiative looking for ERPs suitable for the enterprise. They
collect information regarding ERP vendors and their products from professional magazines,
exhibitions, the Internet and other sources (Şen et al., 2009). Some studies mentioned the
detailed workshops aiming at analysis current business processes are useful to select
potential vendors (Cebeci, 2009). However, most SMEs did not have adequate experience
on implementing information system. Despite the SMEs could employ consultants to
support their work, the costs are considered as an unnecessary expense in the initial stage.
Finally, a list (5-8) of potential candidates and products produced base on the
organizational requirements.
Identify
The focus of this stage is to develop selection criteria and have an initial evaluation of
vendors. “The proper execution of this stage strongly affects the remaining selection
process, since the evaluation of candidates and vendors can be performed correctly only if
the criteria for this evaluation and selection, developed during the information gathering,
are also correct” (Lech, 2012). The individual situation of enterprises is different and
therefore the project team must gather the information related with their own company.
According to analysis the business requirements, a shortlist criteria contains several type
factors was developed for assessing ERP solution. The identify process proper was mainly
used to narrow down the candidates.
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Since most SMEs did not have the experiences of ERP implementation, the vendor
experience and profile becomes extremely critical (Deep et al., 2008). The vendor criteria
aim at evaluating vendor market position, domain knowledge, as well as previous cases. At
end of this stage, 2-4 ERP vendors would be selected as final alternatives.
Evaluation
The ERP vendors would not provide their product and system features before the contact
from potential customers. In order to gain further communication, the project team must
send an invitation to ERP vendors. Potentially, the candidates may reject the invitation due
to the project scale. Workshops are arranged for analyzing the detailed business process.
Through the communication with end-users, top management and other stakeholders, ERP
vendors could provide the proposal of ERP solutions. With the implementation of specific
evaluation methods, such as scoring, ranking or AHP, the project team could make a
decision about the ERP packages selection (Deep et al., 2008).
Moreover, an extremely important step of this stage is reference visits. The SMEs should
focus on similar size and type of industry, implementation challenges, lesson learnt, and
software version etc.
Selection and negotiations
The decision makers could change their mind before the signature of contract. Base on the
previous evaluation processes, a final ERP package are selected. The decision makers
should ensure the all details of software contract, including prices, consultancy, training,
and maintains etc. The negotiations deal with the legal aspects of project. Once completed,
the selection of ERP packages ended.
2.4 Evaluation factors affecting ERP selection
There are number of solutions in the ERP market and each solution has different functions.
It is difficult to select an appropriate ERP solution for particular company. Some authors
stressed that selecting the right ERP vendors and solution is a critical success factor of ERP
implementation (Xue et al., 2005). Therefore, organizations need to develop evaluation
criteria for evaluating ERP packages in decision making process. Researches reveal that
diverse factors may affect the ERP selection, including the resources of organization,
business strategy, and cost etc.
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2.4.1 Evaluation criteria of ERP selection
Several criteria are proposed for selecting ERP systems or information system. Illa et al.
(2000) has presented a formal method to evaluate the ERP alternatives. Several evaluation
factors were proposed and it consists of functionality, adaptability, openness and
technology (Illa et al., 2000). There are nine major factors has been identified for
evaluating and selecting ERP packages based on the fuzzy analytic hierarchy process: total
costs，implementation time， functionality，user friendliness，flexibility，reliability，
reputation，technical capability and service (Gefen and Ragowsky, 2005).
In Lech's (n.d.) research, fit with functional requirements, management opinion, license
cost, and implementation cost are regarded as the four most important factors. Ziaee et al.
(2006) determined three distinct types of factors for evaluation: software system, vendor
and project. Vendor factors consist of supporting and consulting services, experience and
knowledge of our business area, ERP market share and the scale of vendor, reputation of
vendor etc (Ziaee et al., 2006). Software system factors are related to the characteristics of
ERP system and its modules. It consists of business strategy, module completeness
(functionalities), ease of in-house development and upgrading and so on (Ziaee et al.,
2006). Project factors dealt with the terms and conditions related with contract. It includes
time, cost, training, after sales services and warranties and delay penalties etc. However,
most of these evaluation factors are identified in current studies that focused on large
companies.
2.4.2 Differences between SMEs and large enterprise in ERP selection
In contrast, some researches indicated that the importance of evaluation factors is
significantly influenced by the organizational scale (Bernroider and Koch, 2000). Due to the
strict financial limitations, SMEs seek cheaper solutions with lower functional and
organizational impacts (Ravarini et al., 2000). Compared with large enterprises, they did
not have formal business strategies and thus they rarely spend time on studying strategic
choices of IT (Ziaee et al., 2006). The main purpose of implementing ERP systems is to have
more completely functional modules to support business process. Bernroider and Koch
(2000) has proven that SMEs lay high stress on the costs of ERP implementation. They
expected ERP systems could bring huge benefits with low costs. On the other hand, the
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organizational flexibility and business strategy have been rated as more important for large
enterprises. They implement ERP solutions in order to achieve business strategy (eg.
improve business process, international business, increased supply chain management)
Bernroider and Koch (2001) investigated the factors which have a strong relationship with
organizational size and list the priorities base on the questionnaires to 813 Austrian
small/medium and large size Organizations. The fit with business procedures and costs has
also been considered as more important in SMEs.
2.4.3 Proposed criteria for ERP selection in SME
According to a widely literature review in existing studies, it is hard to find a general set of
evaluation factors for ERP selection. Different authors focused on different aspects and
proposed their own evaluation criteria. It is apparent that the selection criteria is affecting
by organizational scale. Some factors related to large companies cannot be used into a
different context. In order to develop appropriate evaluation criteria for SMEs, the MSc
researcher analysis the previous literatures and classify them into four broad categories:
system, vendors, organization and implementation of project.
Organizational factors
Fit with business Strategy
Business strategy is a long term plan which strives to achieve a specific set of goals or
objectives (W. Baets, 1992). The business strategy is different base on the individual
situations of enterprise and industry. For example, enhance the product development
process is aiming at enhance productivity while create partnerships with key supplier is
aiming at improve the competitive advantages in an industry. A comprehensive ERP
packages could contain SCM, CRM, human resources management, material planning
management and other computer-based functionalities (Esteves and Pastor, 1999). Owing
to the various functional modules ERP system provided, many enterprises have considered
ERP system as effective tools for aiding in business strategy, containing improve customer
relationship management, higher supply chain management and so on (Li et al., 2006).
Each ERP package offers different features and hence the decision makers must select
suitable product to meet the organizational needs.
System Functionality
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Functionality is an important concern for managers when they selecting ERP system.
Through Reuther and Chattopadhyay's (2004) survey to Brisbane and Australian SMEs, 13%
of them have identified the system functionality as critical selection criteria. Nowadays,
hundreds of ERP system available in the market offers several common functions. Clients
must choose appropriate ERP packages in view of their business processes. On the other
hand, almost all ERP products would not totally fit an enterprise’s needs because of its
individual situations (Teltumbde, 2000). Customization is essential for ERP implementation.
Additionally, the amounts of customization highly affect the implementation time and cost
of ERP project (Perera and Costa, 2008). Enterprises must select more functional fit ERP
systems so that reduce the redundant costs.
Fit with parent organization systems
Although it is a factor rarely appears in literatures, it is especially crucial to some
enterprises (Ahn and Choi, 2007). Because the limits from parent organization, some
enterprises must choose the same vendor in order to improve the system compatibility.
System factors
System compatibility
The ERP system should compatible with the enterprise’s current applications (Laukkanen et
al., 2007). A single ERP system cannot deal with all business needs from enterprise. ERP
systems have to be integrated with legacy systems or software packages which strive to
solve particular business problems. Moreover, enterprises may implement other systems
so as to meet the further challenge in a long term. The compatibility with legacy systems is
also a critical success factor of ERP implementation (Zhang et al., 2003).
User friendliness
User friendliness are consists of ease of operations and ease of leaning. It is a challenge to
operate ERP in an effective way for unskilled users. In developing countries, few employees
have the experience of using computer-based information systems. A high performance
system improves the users’ acceptance of the ERP package and enterprises’ productivity
(Lim et al., 2005).
System reliability
System reliability is a concern for some enterprises. In some specific industries(eg. Finance,
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health care), the ERP systems required 100% network and system reliability (Kumar et al.,
2003). It will result in a business disruption and huge financial losses when the system was
down for a period of time. The recovery ability has also been considered as an important
aspect of system evaluation. System managers must recover the data in some urgency
cases.
System flexibility
System flexibility consists of upgrade ability and ease of integration(Gupta, 2000). The
generic functionality of ERP system is impossible to meet all industry specific business
requirements in a changeable business environment, and hence the flexibility for further
development is definitely important to enterprises.
Project implementation factors
Total costs
ERP implementation is a huge investment project. It is not a simple process of purchasing
and installing systems (Muscatello et al., 2003). Apart from the direct costs of purchasing
ERP systems, other cost components such as training, maintenance and upgrades
contribute to the total cost in a noticeable manner (Wei et al., 2005). Furthermore, some
specific costs have to be added into the list in case of the enterprises’ individuals
requirements (Brewer, 2000). For example, the required infrastructure of every enterprise
is different due to the previous investments on IT infrastructure. The clients should check
the status of current infrastructure and calculate the costs for required infrastructure.
Owing to the limitation of resources, the decision makers must consider the balance
between the budgets and costs. Finally, the main cost elements contain purchasing
software, training, hardware and version upgrades.
Development technology
Development technology dealt with specifics of hardware and software in developing ERP
systems. In order to stay competitive in a dynamic business environment, advanced
technology and tools are used by some ERP vendors (Sahay and Gupta, 2003). However,
the enterprises would face with difficulties when they intend to develop extra modules in-
house. In order to avoid this dilemma, the enterprises should check the ERP system with
current IT trends. Because of the lack of IT experiences, most firms would employ an
15
external consultant to support the evaluation of solutions’ technology (Cebeci, 2009).
Nevertheless, the upgrade and maintains of ERP systems has become a responsibility of
ERP vendors nowadays. It may reduces the risks bring from development technology.
Implementation time
ERP implementation project is long and complex. A general ERP project would cost six
months to two years (Aloini et al., 2007). The accurate time depend on the amounts of
modifications as well as organization size. For most SMEs, they cannot bear a long
implementation time. They expect to gain the benefits from ERP implementation in a short
time. In Baki and Cakar's (2005) research, the implementation time can be cut down if
enterprises spend more resources and costs on implementation.
Vendor factors
Vendor's Position
The vendors’ position was considered as an especially important factor in ERP selection.
Learning from past experiences, some enterprises emphasize on the vendor reputation
when they select ERP packages (Kumar et al., 2003). Compared with domestic ERP vendors,
the global vendors have more domain knowledge and experiences on particular industries.
And their solutions are more compressive than domestic vendors. Nevertheless, most
SMEs cannot afford the expensive solutions. When companies are looking for ERP solutions,
they can consider the vendors with good reputation as a potential choice (Kumar et al.,
2003).
Domain knowledge of vendor
It is important that the ERP vendors have adequate domain knowledge of relevant industry.
The business processes reengineer is a vital part of current ERP implementation. Many
enterprises regard ERP implementation as a chance to redesign business procedure
(Murphy and Simon, 2002). If the vendors have no or few experiences on case industry,
their solutions are not reliable. It may leads to huge finical losses to enterprise.
References of the vendor
Even though the ERP projects cannot be totally the same, the successful project in similar
industry could improve the success rate of ERP implementation. The enterprises can look at
16
the references of vendors as selection criteria. For small ERP vendors, they may lack the
experiences of implementing ERP systems in specific industry (Yusuf et al., 2006).
After Sales services
The capacity of after sales services plays an important role in vendor evaluation. The main
issue of small and medium vendors is the insufficient of technological infrastructure and
supportive staff (Perera and Costa, 2008). Most enterprises face technical or other issues
after the implementation of ERP systems. They need to contact ERP vendors for further
support, which including maintain and upgrade the ERP system.
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3. Research Methodology
This chapter intends to present the research methodology and approach which were
employed for this project. In order to give a clear understanding to readers, it also
introduces the frame of this research and the data collection methods employed.
3.1 Research Approach
Research methodology is a systematically way to solve the research questions. It may
contain particular philosophies, phases, procedures, rules, techniques, tools, and
documentation that allow researchers to conduct, monitor, and evaluate the research
(Gasson, 1995). There are two kinds of approaches for conducting the research, inductive
and deductive (Hyde, 2000). The researchers need to decide their own research
approaches base on the nature of study.
The beginning of deductive approach is the establishment of theory (Saunders et al., 2009).
A theory is an explanation for a set of observations, which have usually been presented
from other studies, but might not have been proposed formally (Hayes, 2000). Base on the
theory, some hypotheses are developed for further evaluation. Through some specific data
collection methods, such as experiments, observations, surveys or case studies, the
researcher could test the hypotheses in a stated situation (Johnson and Turner, 2003). If
the conclusions from research could support the hypotheses, it can be considered that the
theory is reliable. If not, it is a serious challenge and thus the researcher needs to take
more theory or explanation into consideration. With the deductive approach, “information
and data are continually being collected, and the theories are continually being refined as
the body of observations grows” (Hayes, 2000). The figure 1 below describe the processes
of deductive research approach (Hayes, 2000)
18
Figure 1: the deductive research process (Hayes, 2000)
On the other hand, the inductive approach begins with the data collection, so that the data
collection is behind the establishment of theory. It is particularly useful when the
researcher intends to explore a new area (Hyde, 2000). The figure 2 below describe the
processes of inductive research approach (Hayes, 2000)
Figure 2: the inductive research process (Hayes, 2000)
This research will be conducted with a deductive approach. Because of the nature of
research topic, there are no available ERP packages evaluation criteria about Chinese SMEs
in the existing literatures. Despite some studies investigate the evaluation criteria and
decision making processes affecting enterprises select ERP packages, they focus on the
context of western countries and large enterprises. Consequently, a hypothesis of
19
evaluation criteria for Chinese SMEs was established after the literature review. Then,
through a case study of Chinese small manufacturing enterprise, the data collection
method (interviews) was introduced to analyze the case. After the investigation of case
study, the evaluation criteria would be refined and proved for Chinese SMEs.
3.2 Research Design
This research is presented diagrammatically as shown in figure3 which consists of three
main stages with each outcome. Owing to the nature of this research, a data collection
method (interviews) was introduced to address all the research questions and objectives.
Each stage will be explained in the following paragraphs.
3.2.1 Stage 1: Literature review
The foundation of this research is literature review. It aims to build up a theoretic
foundation for the dissertation. There are amounts of available information and literatures
closely related to information systems research. Some appropriate literatures involve ERP
selection will be chose for further reading. After the process of literature review, the
researcher can have an in-depth understanding of research topic. Hart (2001) declared the
main reasons of literature review: find errors or pitfalls of previous research, design a more
appropriate methodology for their study, find the gaps in the current research and develop
a unique research topic.
In this research, it comprises two parts of literatures. The first part is the review of current
studies about the ERP selection processes, particularly in SMEs. The scope of review covers not
only western countries, but also Chinese context. This activity is to establish an adjust decision
making processes for Chinese SMEs select ERP packages. The decision making process between
SMEs and large enterprises is similar. As a result, the established ERP selection processes can
be adopted in the context of Chinese SMEs. Further, the focus of second part is to review the
literatures about the evaluation criteria. The main purpose is to find as many potential
evaluation factors as possible that in relation to ERP packages evaluation. A summarize of
factors along with descriptions and meanings will be developed in the end of literature review.
Owing to the differences of cultural factors, these evaluation criteria need to be identified in
the case study stage. After the stage of literature review, the objective 1 and 2 are achieved.
20
Figure 3: the framework of this research
Stage 1: Literature review
Part 1: ERP selection process
Part 2: evaluation criteria
affecting ERP selection
Stage 2: case study
Interviews with the
members of project team
Aims to evaluate the evaluation
criteria base on the summary of
evaluation criteria
Outcome
1.Current studies about
evaluation criteria
2.Decision making process for
Chinese SMEs
Outcomes
In-depth understanding
of what evaluation
criteria used in ERP
selection
Stage 3: Analyse and evaluate the multiple data from data collection method
Theory and empirical model of ERP selection criteria in Chinese SMEs
21
3.2.2 Stage 2: case study
After exploring the decision making processes and evaluation criteria, the next stage is case
study in order to appraise what factors are suitable to Chinese SMEs context. The case
study approach is especially appropriate for the information systems research. It has been
suggested by many researchers as an effective approach to promote the understandings of
complex context. Compared with other research approaches, the case study approach is
considered as “inexpensive and potentially powerful approach of indentifying and
statistically testing patterns across studies” (Lucas, 1974). It contains a group of methods
which mainly applied in qualitative analysis (Yin, 2009). With certain methods, such as
participant-observation, in-depth interviews, and longitudinal studies, data are collected
for further analysis. Therefore, case study is the most appropriate approach for this
research. Despite it is has been doubt that the single case cannot explore and identify the
issues in a broad context, Yin (2008) stated that a single case study is suitable if it is an
extreme, or it could provide a critical, clear looking on specific situation. In this case, the
data collection method is interviews.
Interviews with the members of project team
Interviews arranged with project team members and external participant strive to
investigate what evaluation criteria could actually affect the Chinese SMEs during the ERP
selection. It directly reaches to the research topic of this study. The well-designed
interviews are key approach to obtain the responses from participant s. In most Chinese
SMEs, the managers and employees are lacking of experiences of ERP systems. They have a
knowledge gap from organization to information technology. In order to collect data, the
interview questions were designed in organizational viewpoints. For conducting interviews,
the summary of potential evaluation criteria (in first stage) is extracted as the foundation
of questions. Additionally, interviews begin with Chinese and the answers will be record for
transforming and analyzing.
3.2.2.1 About the Single Case
Taizhou Zhenxing Machinery Co., Ltd is a typical small Chinese enterprise which focuses on
22
producing the air-conditioning parts. It owns 300 employees and the sales of products are
about 50 million yuan each year. As a result of the scale expand, the firm faced with a
bottle neck which affected its costs and profits. In order to improve their market
competitive, operational effectiveness, and touch potential customers, the top
management decided to implement ERP systems. With the widely evaluation of ERP
packages available in the market, the Kingdee, one of ERP vendor, was selected as ERP
packages provider. According to the case study of this company, the researcher could in-
depth understand and explore the evaluation criteria used in Chinese SMEs.
3.2.2.2 The Access of the Data within the Case Company
After the target case and research topic have been determined, the MSc researcher begin
to contact the case company. The e-mail with a brief explanation of research purpose was
sent to a top management of case company. Then, a telephone meeting was arranged
which aimed to explain the details and ethics issues of research. With the understanding of
research topic and purpose, the main contact agreed to participant to this research and
promise to provide further help in the research.
3.2.3 Stage 3: Analyze and evaluate the interview data for examining the
model
The purpose of final stage is to analyze and evaluate the outcomes of previous stages. The
findings from case study will be used to assess the effectiveness of model generated after
literature review and thus enhance the current ERP theories in Chinese context.
3. 3 Data collection
Data collection is an important process to research which aims to collect relevant
information about the research questions (Swisher, n.d.). This study was designed to
explore the evaluation criteria used in current Chinese SMEs evaluate ERP packages and
the role evaluation criteria plays in ERP packages evaluation was qualitative. The
23
qualitative research method is used extensively when the researchers intends to explore
the human beliefs, perspectives and concerns on particular areas (Shuttleworth, 2008). It
provides richer explanations of what and why certain outcomes appear. There is various
data collection approaches used in qualitative research, such as Focus groups, interviews,
content analysis and so on (Hsieh and Shannon, 2005).
3.3.1 Interviews
The interviews, which is one of the most frequently used data collection approach, was
employed in this research. It is a crucial method when the researchers intend to do
information systems related research. The researchers could control the pace and flow of
research and thus collect more complete data about the research topic (De Leeuw, 2005).
In this study, the MSc researcher related the evaluation criteria with decision makers
directly through the semi-structured interviews. There are mainly three different types of
interviews, including structured interviews, unstructured interviews, as well as semi-
structured (Nunkoosing, 2005). Compared with other types of interviews, the semi-
structured interview is more flexible and it allows the interviewers to add new questions
into interviews base on what the interviewees says (Louise Barriball and While, 1994). In
addition, due to the distances between the interviewees and MSc researcher, telephone
interviews were selected in this research.
3.3.2 Interview design
The 14 evaluation factors derived from the stage of literature reviews were extracted as
the foundation of the interview questions. The main purposes of interviews are to acquire
the participants’ viewpoints on evaluation criteria of ERP packages selection. In order to
promote the communication between the interviewees and researcher, the interviews
questions were scientific and comprehensive defined. For each interviewee, 6 to 8
questions were asked and it contains the role of participant in enterprise, the previous IT
experiences and the perspectives on each evaluation factors. According to these questions,
the research could in-depth understand the reasons of decision makers select specific
24
factors as evaluation criteria. Finally, the interview questions were designed and presented
as (Appendix I)
3.3.3 Participants of Interview
During this study, 6 interviewees in the company were chose which include the CEO, IT
manager, end-users in diverse departments (i.e. accounting, manufacturing, sales
department) and the IT specialist from external organizations (Figure 4). These participants,
who involved different roles of project team and external entities, allow the Msc
researcher to acquire a comprehensive understanding about the evaluation criteria used in
Chinese SMEs.
Role Amount
CEO 1
End-users 3
IT managers 1
IT specialist 1
Total 6
Figure 4: The Interview Participants
3.3.4 Data Collection by Interview
3.3.4.1 Before Interview
With the permission and help of main contact, the participants have been determined and
arranged before the case study. Then, the MSc researcher contacts the participants
individually for scheduling and conducting interviews. Through the e-mails, the interview
Guide, which consists of purpose and procedure of research, the interview questions as
well as usage of the interview content, was sent to interviewees in advance.
25
3.3.4.2 The Interview
Due to the cultural background of case company, the interviews were conducted in
Chinese. At the beginning of each interview, the participant was explained the purpose and
procedures of research, the ethic issues in relation to the usage of collected data, and the
use of recording software. With the permission of participant, the interview would start
and be recorded. During the interviews, the questions were asked and followed the
interview question lists.
3.3.4.3 Interview Administration
Because of the distances between the interviewees and MSc researcher, all the interviews
were conducted through Skype to Skype and each interview lasted for 30 minutes to
40mintues. The interviews were recorded by iFree Skype Recorder with prior permission of
interviewees. Furthermore, the written transcription was done after the end of each
interview. In order to protect the personal information of interviewees, the record file and
transcriptions were deleted after the completion of entire research.
3. 4 Data Analysis
Due to its predominant in analyzing qualitative data, the thematic analysis approach was
used for analyzing the data collected from the previous interviews. The aims of this method
is to identify, analyze and report patterns data (Braun and Clarke, 2006). Compared with
other analysis approach, it tends to provide less description of overall data but more focus
on the detailed analysis of some data which are the analyst interested. Despite this
research is conducted by deductive methodology, it can also integrated with this data-
driven inductive approach through priori coding. In this research, the-six-phases thematic
analysis framework proposed by Braun and Clarke (2006) has been modified and thus it
consists of five stages:
Step 1: Getting familiar with the data
Although transcription is considered as a time-consuming and frustrating process, it offers
an opportunity for getting familiar with the data. Further, some researchers even
26
emphasize it is “a key phase of data analysis within interpretative qualitative methodology”
(Bird, 2005). The main purpose of this stage is to have an in-depth understanding about
collected data. Therefore, the researchers must read and re-read the interview
transcriptions for several times.
Step 2: Generating codes
When the in-depth understanding of collected data was gained, the researcher begins to
code the data. The code is a label or name identifies the feature of the data which may be
interesting to the analyst (Fereday and Muir-Cochrane, 2008). Boyatzis (1998) reinforce
that it is “the most basic segment, or element, of the raw data or information that can be
assessed in a meaningful way regarding the phenomenon”.
The coding of data is regard as a technical practice. A “good code” should capture the
qualitative richness of the phenomenon. Instead of the microanalysis of data, Attride-
Stirling (2001)suggested that the researchers should concentrate explicitly on the analysis
object. In this study, the interview questions are based on the theoretical model
established after literature review. Hence, some prior codes such as costs, vendor position,
and implementation time were developed and the MSc researcher strived to find these
codes from raw data. Moreover, the extra codes relevant with ERP packages evaluation
criteria were also been identified. In order to avoid reiteration, the MSc researcher checks
the entire data for many times and deletes some redundant codes. Meanwhile, the pieces
of textual data relevant with identified codes were extracted by the researcher. Each data
extract might be uncoded, coded once, or coded many times, as relevant. In this stage, The
Microsoft word (a word processing program) was used to store the coding scheme and
textual data.
Step 3: Connecting codes and identifying themes
Base on the code scheme produced from previous steps, the focus of this stage is to
connect the relevant codes together and identify the themes. Braun and Clarke (2006)
suggested that it begins with all the codes have been identified from the data set and
27
further it focus on analyzing the themes, containing put all relevant codes and data
extracts into identified themes.
With a careful evaluation on the code and scheme and the data set, the main theme was
identified as ERP packages evaluation criteria. Furthermore, there were 11 factors in
relation to Chinese SMEs context has been found. And these codes were divided into five
sub-themes which consisted of organizational factors, system factors, project
implementation factors, vendor factors, as well as external factors. It is apparent that four
of these sub-themes are actually priori themes that were identified after the literature
review. At last, a final coding scheme was established as presented in Appendix II.
In order to reorganize the identified code and themes, the concept map was introduced to
aid the description of their relations. By checking the context of codes, these codes were
classified as three categories: evaluate factor, issues and influences. With the using of
concept map, these items and themes could be represented into a single diagram.
Compared with a holistic diagram, it is more clearly and simply. Each sub-theme linked with
some codes and hence there are totally five concept maps have been developed. An
example of concept including a sub-theme and different types of codes was shown in
Appendix III. Finally, the researcher went back to the data set and check the accuracy of
concept map reflected the meanings of data set. It aimed at correcting some potential
mistakes produced during the process of drawing concept maps.
Step 4: Reporting the findings
The final stage of the thematic analysis is about “convinces the reader of the merit and
validity of your analysis” (Braun and Clarke, 2006). While reporting the findings, it directly
linked the research questions with the research outcomes. Attride-Stirling (2001) indicated
that it is vital that the research could provide sufficient evidence to support the findings. In
this stage, the established concept maps were used for organizing ideas and hence the
researcher could easily find the relevant quotes from the interviews to support the
arguments or assumptions.
28
Overall, due to the case in relation to a different cultural background, the MSc researcher
translated the collected data from Chinese into English. It is important to keep the accuracy
between the original text and translation.
29
4. Data Analysis and Findings
The qualitative data was analysis to in-depth explores what and why the evaluation criteria
were deemed that critically affect the evaluation of ERP packages in Chinese SMEs. In order
to analysis the interview data, the thematic analysis approach was adopted and thus the
findings are presented and discussed into five sub-sections. In the end of this chapter, a
summary of evaluation criteria will be given.
4.1 Organizational factors
Fit with business strategy
Business strategy is a long term plan for achieving particular business objectives (W. Baets,
1992). Through the survey of Perera and Costa (2008), fit with business strategy has been
identified as the most important evaluation criteria. However, the findings of this research
are contrary to this result. During the interviews, just two of internal participants (total 5)
stated that they would evaluate whether the ERP packages fit with business strategy in the
ERP packages evaluation.
The CEO, who is in charge of enterprise, said that:
Along with the enhancement of business scale, our enterprise faced with a bottleneck. We
expected to remove redundant business process as well as cut down inventory costs, and
hence improve the business performance. Additionally, the Internet sales component requires
to be added for touching online customers. […] While the expenses of ERP packages matching
our requirements, I will emphasize the fitness with our business strategy. Obviously, it is a
waste of time and resources if the ERP packages cannot support our business strategy (CEO).
Although the top management had a clear understanding on the business strategy, other
member seems a little confuse about this:
Of course, fit with business strategy is one of the evaluation criteria. This factor has been
proposed by many studies and literatures regarding to ERP system implementation. The
functions and benefits bring from ERP packages must support our business strategy. For
instance, the CRM sub systems could increase the communication with customers. […] In fact,
30
I did not know the details about business strategy. It results in some difficulties when I
evaluate the ERP packages (IT manager).
Moreover, the end-users (sales, accounting and manufacturing departments) did not
mention anything about this factor. It emerged that the employees might did not have a
recognized understanding on organizational business strategy. When they evaluate the ERP
packages, the decisions were just based on their own domain knowledge. This is definitely
dangerous, and may leads to an incorrect selection. In order to make a scientific decision,
the IT specialist suggested that “before the evaluation of ERP packages, the members of
project team have to learn and understand the business strategy of enterprise”.
System functionality
The system functionality dealt with the specifics of functions and modules of ERP packages
(Gargeya and Brady, 2005). Even though functional modules ERP packages provided are
compressive and flexible, the requirements from enterprises may not be fulfill in some
specific situations. Indeed, customization is a good solution to meet these individual
requirements. Nevertheless, it is more costly and risky (Bingi et al., 1999). Therefore, the
decision makers are looking for a more functional fitness ERP packages in ERP selection
(Bingi et al., 1999). This factor was confirmed by the CEO and IT manager:
Because of the operational benefits come along with ERP implementation, we determine to
purchase ERP packages. Actually, it is new to all of the employees. […] Business process
reengineer and customization are costly and risky. The more customization needed, the longer
it will take to implement the ERP systems (CEO).
The main modules we current required are just accounting, sales and manufacturing. Most of
ERP products available in the market could offer these functions. However, we focus on
evaluating the functional fit with our business process (IT manager).
Compared with CEO and IT manager, the end-users pay more attention on the functional
modules which could aid in their operational activities. For example, the sales department
end-user stated that “In our enterprise, all the sales orders are handled by manual. It
wasted lots of time, and may leads to confusions and errors in sometimes. I would check the
ERP packages whether contain the digital sales modules”. According to the illustration of
31
the participants above, the evaluation of system functionality not only includes the
functional modules of ERP packages but also the functional fitness with current business
processes which present the high and extend impacts to enterprises’ performances. In
addition, the CEO gave us a clue that the evaluations of system functionality were affected
by the limitations of available resources, whereas the enterprises could apply more
expenses in the customization.
4.2 Project implementation factors
Total costs
Cost is a basic unit of products. The enterprises will spend a substantial expense on the
implementation of ERP project (Ehie and Madsen, 2005). The total costs may involve many
sub sections, such as the direct costs of purchasing ERP systems, training, maintenance and
so on (Baki and Cakar, 2005). This factor was frequently mentioned by interviewees.
Although their perspectives were based on their positions and responsibilities in
enterprises, all of the interviewees identified the costs as an important evaluation factor.
From the CEO, which is an owner of enterprise, he presented as follows:
I think cost is the most important evaluation factor of ERP packages. The financial and human
resources are limited in our enterprise. We would not afford an over budget ERP solution even
the ERP systems is really good. The shortage of funds may affect the running of our business.
[…] Furthermore, some vendors will add extra expenses after the signature of contract if we
do not have a strict limitation on product prices (CEO).
The interviewees from accounting department proved that “The available resources of
enterprise are limited. It is not a good decision to purchase an over-budget ERP packages”.
In contrast, the explanations from other participant seem more interesting. The
manufacturing department end-users indicated that “Compared with calculate the costs of
ERP packages, I think the system functionality is more important. A more functional fit ERP
package could better support our works. Nevertheless, we must put the costs into first
evaluation factor because the final decision was made by the top management. They would
not accept if the price of ERP package is higher than their expectations”. In this case, it
possibly influenced by this consideration, all of project team members took into account
32
the costs of ERP packages when they evaluate the ERP systems. The reason of Chinese
SMEs stress the total costs was further pointed out by the IT specialist:
Most SMEs consider the ERP systems as an effective tool for promoting the business
performances. They are trying to implement ERP systems but do not understand the benefits
and risks exactly. In order to reduce the risks, they have an expectation on the costs of whole
project and will not accept over-budget (IT specialist).
From the discussion above, it is evident to note that the costs of ERP project intensively
affect the project team evaluate ERP packages in ERP selection stage. As a result of the
limitation of available resources and risks management, the total costs of ERP packages are
identified as the most important evaluation criteria in the company. Moreover, in terms of
the responses of manufacturing department end user, it is apparent that the attitudes of
top managements would dramatically influence consequences of the ERP selection.
Development technology
The development technology was perceived as an evaluation factor of ERP packages
selection. After the implementation of ERP systems, it still needs to be continuous
improved and upgraded so as to meet the changeable business environment. Hence, the
software and hardware used in building the systems may affect the possibility of further
development (Sahay and Gupta, 2003). The quotes from IT manager explained why the
development technology has been considered as evaluation criteria:
In the company, my responsibility is to maintain the network, computer and database.
Because of the job and education background, I would look at the development technology of
ERP packages (IT manager).
However, the perspective from CEO against this viewpoint and emerges that this factor
was not a concern for top management in the ERP packages evaluation. “It is impossible to
do any in-house development due to the limitation of enterprise’s human resource. […] We
intend to outsource these modules to external organizations if any requirements
appear”(CEO).In fact, the structure of IT department is very simple and crude in Chinese
SMEs. Each SME may just have three to five employees which aiming at maintaining the
network and computers. It is obvious that they are unable to undertake the works of in-
33
house development. As explained by the CEO, the enterprise tends to employ external
entities to deal with the upgrade of systems and hence they are not care about the
development technology.
Implementation time
Implementation time is a general but important factor in the ERP packages evaluation.
Although ERP project is long and including ERP selection, ERP implementation and post-
implementation, the adopted company begins to apply the ERP systems to perform their
daily works and therefore directly affect the business from the completed of ERP
implementation (Esteves and Pastor, 1999). All interviewees pointed out that they would
consider this factor when they evaluate the ERP solutions. And each of them has its
estimation and expectation on implementation time. The three end-users stated “the ERP
implementation should be finished between three and six months”. Moreover, the CEO
explained the reasons of selecting implementation time as evaluation criteria:
I expect the ERP system could contribute to our business in a short time. However, it seems
unprofessional if the project finished in three months. In contrast, it will cost too many
resources and expenses if the implementation time is more than one year. […] Consequently,
the most appropriate implementation time is from three months to one year (CEO).
4.3 System factors
System reliability
It is vital that ERP systems could provide required and valid services in a long time(Yang et
al., 2007). It has been regard as most important factor when the decision makers evaluate
the ERP product itself. In order to explore the further reasons, in-depth communication
was conducted during the interviews. The following quotes from interviews illustrated the
potential problems may cause by low system reliability:
I did not pay many attentions on the other system factors except system reliability. In our
industry, unexpected breakdown or system errors may cause serious consequences, including
people injuring and finical losses (CEO).
34
The accounting system requires high system reliability. Any mistakes in relation to finical data
are dangerous to our enterprise. Moreover, the data errors caused by computer-based system
are difficult to be aware (accounting department end-user) .
As a result of these issues, the company extremely underlines the reliability of ERP systems.
They cannot bear a low reliability ERP system. The IT manager reinforced that “In
sometimes, the breakdown of ERP system is allowed. But, the data and system should be
recovered easily”. At last, the IT specialist summarized this phenomenon “It is possible that
the decision makers do not understand the importance and influences of other system
factors (compatibility, user friendliness, flexibility), but they are clear about the business
disasters come with unreliable system”.
System Compatibility
As mentioned in section 2.4, the compatibility with legacy information systems is a decisive
factor affect ERP system implementation (Laukkanen et al., 2007). During the previous IT
investments, many enterprises have implemented information systems in order to aid in
their business process. These information systems cannot be simply removed and the ERP
systems must integrate these legacy systems (Chang et al., 2008). Nevertheless, the
findings of this research are contrary when take it into consideration in Chinese SME
context:
In our company, we maintain an accounting package so as to deal with some finical data
relevant with business. Apart from this, we do not have another computer-based system. As a
consequence, I evaluated the system compatibility, but it was regard as less important (IT
manager).
In fact, this is a general status of Chinese SMEs. Most of them have no or few IT
infrastructure and hence the system compatibility was perceived as less important than
western context.
User friendliness
This factor was repeatedly presented by the end-users. A high performance system could
promote the productivity and effectiveness of enterprise (Lim et al., 2005). The
35
explanations from participants demonstrate that a good ERP system should easy to learn
and operate, particularly for unskilled end-users. The following two quotes from two
respective interviews declare that why the user friendliness is important for ERP packages:
Although I do not have the experiences of using ERP systems, I am familiar with computer-
based information systems. As a consequence, I think it is not very difficult to learn the
operations of ERP systems. […] Definitely, a higher user friendliness ERP packages would
reduce the time of learning (Accounting department end-user).
I do not have the experiences of using information systems and rarely use computer. […] Of
course, I will try my best to learn it. However, I will face with serious pressures if the ERP
system is hard to operate (Manufacturing department end-user).
I am not familiar with ERP systems. I expected that the ERP system is easy to learn and
operate. For example, the description of each menu is clearly explained to us (Sales
department end-user).
The illustration of the operational manager reflects that each end user wants to acquire a
high user friendliness ERP packages, even they do not face with any difficulties of operating
ERP systems. For most Chinese SMEs, in particular for manufacturing industry, the
education of employees is low and consequently they are difficult to learn and operate ERP
systems. It significantly influences the efficiency and productivity if the ERP system is too
complex.
4.4 Vendor factors
Vendor position
Chinese ERP market begins from late 1980s and the beginning of the 1990s (Klaus et al.,
2000). It tends to be stable after twenty years fierce competition. From the study of Peng
and Nunes (2010), “the foreign and domestic ERP vendors respectively hold about half of
the Chinese ERP market within the manufacturing industry in 2008”. Further, even though
most domestic vendors were developed from financial software, including UFIDA, Kingdee,
Inspur and Guoqiang, the focus industry of ERP system is different at the moment. The
decision makers need to evaluate the vendor’s position base on the industry background of
36
their own enterprises. This factor was confirmed by most participants and it was perceived
as a crucial evaluation factor:
Our company is manufacturing and focus on producing metal parts. If the ERP vendors do not
have the domain knowledge and experiences on the same or similar industry, their solution is
unreliable. I believe that the ERP vendors with high reputation could provide more
compressive and superior services (CEO).
I am not familiar with the functions and features of ERP packages. Consequently, it is difficult
to select an appropriate ERP packages for our company. […] The vendors with good
reputation are my first choices (Sales department end-user).
As clearly shown in these statements, the decision makers lay high stress on the reputation
and domain knowledge, which are affecting by the vendor’s position. Due to the lack of IT
knowledge and experiences, they did not want to spend lots of time and costs in the ERP
selection stage. However, this stage is particular crucial important which could significantly
influencing the success of ERP project. In order to reduce the risks, they tended to choose a
more “reliable” ERP vendor and require them to provide “perfect” services, including the
ERP implementation, maintance and upgrading the versions of systems. On the other hand,
affecting by the resource limitation, the CEO of company presented “the solutions from
large vendors may be better but too expensive to afford. At last, we select a medium
company as ERP vendor”.
After sales services
It is vital that the ERP vendors could provide abundant support after the sales of ERP
packages. In general, the implementation of ERP packages is a part of contract and will be
confirmed by the ERP vendors (Umble et al., 2003). The main argument between the
vendors and customers are the quality and quantity of services offered after the
implementation of ERP systems, including training, maintaining, upgrading the ERP systems
and etc. This factor was pointed out by the IT manger:
The evaluation of technological infrastructure and supportive staff is a part of vendor
evaluation. It determines the vendors whether have the sufficient capacity to offer proper
services in ERP post-implementation stage. Instead of collecting the information from
37
magazines or exhibitions, we prefer to visit the success references in real word and thus
acquire other users’ opinions on the quality of vendors’ services (IT manger).
According to the interpretations above, it is evident that this factor contributes to the
vendor evaluation in a noticeable manner. The ERP vendors need to have adequate
capacity to provide support when the enterprises face technical or other problems in the
all ERP project life cycle. Further, it shows that the credits of vendors have been taken into
consideration by the decision makers. They cannot completely trust the vendors. From the
quotes of CEO, the belief between customers and vendors is a critical issue in Chinese
business context.
This is a general situation in China. In order to acquire the sales orders, vendors promise the
customers to offer many admirable services. After they get the contract and money from
enterprises, they will not provide the services as they promised (CEO).
Because of this issue, the suggestions from relatives or friends may significantly influence
the decision of ERP packages selection. The accounting department end-user presented
that “although their viewpoints are subjective and mainly concentrate on their own
experiences, an awful experience on specific vendor may force us to give up this vendor”. In
order to acquire potential customers, the ERP vendors must emphasize and promote their
quality of after sales services.
4.5 External factors
Consultancy
This factor was not mentioned in the interviews to internal participants but strongly
recommended by the IT expert. In western countries, the consultants are regarded as a
crucial role which could facilitate both ERP packages selection and ERP implementation.
Their responsibility is to investigate the status of company, analyze the company’s
requirements and provide opinions and suggestion on ERP selection (Thong et al., 2012).
This information assists the decision makers in determining a “right” decision. As proved by
38
(Lech, 2012), the more “complete” information collected the more “right” decision made.
The IT specialist indicated that:
The suggestions from consultant are vital to the enterprises which are not experienced in
information systems implementation and employees lack IT domain knowledge (IT specialist).
However, the Chinese top management rarely engage the help from external entities and
tend to make the IS decision by themselves. The following quotes illustrate that why the
consultancy factor was not emphasized by the Chinese SMEs:
The management systems in Chinese enterprise is very centralized and directive. The top
managers often hold extreme control on enterprise’s decisions. […] Particularly for private
companies, their owners were reluctant to show organizational status to external entities.
Additionally, the high prices of consultancy fees is also a reason of Chinese SMEs reject to
employ consultants (IT specialist).
The implementation of ERP project requires multiple skills, including functional, technical,
and interpersonal skills (Yusuf et al., 2006). The IT manager in enterprise cannot offer
abundant support for decision making. In order to increase the possibility of ERP project
success, it is essential to employ and involve external entities in IS decision making.
Compared with the huge finical and time losses of failure ERP project, the costs on
consultancy services is necessary and worthy.
4.6 Further Discussion for findings
Overall, this study identified and explored a set of evaluation factors in ERP selection stage
in current Chinese SMEs. Through a case study of Zhenxing company, the evaluation factors
were summarized and defined.
In particular, the findings of this research proved that the Chinese enterprisers lay stress on
the total costs of ERP packages. If the price of ERP solutions is higher than their
expectations, they will not consider other features of products. Moreover, during the stage
39
of ERP packages selection, each stakeholder has their own opinions base on the positions
and responsibilities in enterprises. Consequently, some evaluation factors are more important
to specific decision maker while others are considered as less important. In fact, there is no
most important evaluation factor in ERP packages evaluation. However, the findings emerged
that the attitudes from top management might influence the viewpoints of other
employees. In most Chinese SMEs, the nature of enterprise is private and hence the
owners of enterprise can absolutely determine the strategy of ERP packages purchasing.
For ERP vendors, which intend to touch small and medium ERP market, they must adjust
the features of ERP products to meet the requirements from the top managements.
According the research of this case study, it is clearly show that the top managements
more stressed the costs of ERP packages, system reliability and the qualities of after sales
services.
Moreover, owing to the lacks of IT experiences and skilled IT staffs, the Chinese SMEs are
not able to analysis their requirements and evaluate the performances of systems
accurately by themselves. Instead of evaluating the features relevant with system itself,
such as system compatibility, system reliability, flexibility and user friendliness, the Chinese
SMEs more lay stress on the vendor factors. They believed that the ERP vendor with good
reputation could provide more reliable and perfect services. Nevertheless, the prices of
large ERP vendors’ solutions affect their decisions. Finally, they tended to balance the costs
as well as the vendor reputation and choose a more appropriate ERP packages. As
identified in the findings, in order to increase the possibility of ERP success, the Chinese
SMEs could employ the external organizations such as consultant and IT specialist for
facilitating their works in ERP selection stage. Their suggestions are based on the holistic
evaluation of ERP solutions, may including vendor evaluation, system evaluation and so on.
Thus, the consultancy factor is defined as an external evaluation factor in this research.
4.7 Summary
This chapter presents the analysis and findings of the interviews with the six different role
interviewees (CEO, sales department end-user, account department end-user,
manufacturing department end-user, IT manager and IT expert) in the case company that
40
in-depth discussed what the evaluation criteria Chinese SMEs used in ERP selection and
why these evaluation factors are important for Chinese SMEs. Through the case study to
Zhenxing Machinery Company, 11 evaluation factors has been identified and it contains: (1)
total costs, (2) fit with business strategy, (3)system functionality, (4)user friendliness,
(5)system reliability, (6)compatibility, (7)implementation time,(8)development technology,
(9)vendor position, (10)after sales services, (11)consultancy. Compared with the
framework established after literature review, three evaluation factors has been removed,
including references of vendor, domain knowledge of vendors, system flexibility and fit
with parent organization systems. Because of the suggestions from IT specialist, the
consultancy factor was added into model. At last, an empirical model of ERP selection
criteria was generated and shown as follows:
Figure 5: Empirical model of ERP selection criteria
41
5. Conclusion and Discussion This study identified, examined and explored how the Chinese SMEs select their ERP
packages. It consists of the establishment of adjust ERP selection processes for Chinese
SMEs and the investigation of evaluation criteria used in the ERP packages evaluation. The
conclusion is provided summarize this study. After this, the limitation of this research and
recommendations for further research are presented.
5.1 Conclusion
In order to discover existing literatures and researches about ERP selection and build up a
theoretical background of research topic, the literature review were set up in two major
areas: ERP selection process in SMEs and evaluation criteria for ERP packages evaluation.
For the ERP selection process, the major decision making processes are similar between
western and Chinese context. It mainly involves project planning, identify (information
collecting), evaluation as well as selection and negotiations. As a consequence, an adjust
decision making processes was developed for supporting Chinese SMEs selecting ERP
packages after the literature review. Due to the complexity of cultural and finical
background, the evaluation criteria developed by western countries cannot be simply
employed in Chinese SMEs. The main focus of this study is to evaluate and identify the
evaluation criteria used in Chinese SMEs.
As a result, the 14 potential evaluation factors were first identified after the literature
review. These factors were analyzed and classified into four main categories: organizational
factors, project implementation factors, system factors as well as vendor factors. The
research was designed to prove and refine these factors according to a case study of
Zhenxing Machinery Company.
Based on the evaluation factors identified in the literature review, the semi-structured
interview was conducted with participants from case company and external entities. After
the interviews with participants, thematic analysis approach was introduced to analyze the
collected data. At the end of findings, an empirical model of ERP selection criteria was
42
developed for Chinese SMEs. There are five categories of factors have been identified. The
organizational factors are related to the business strategy and required functional modules
of enterprises. A high availability ERP packages must fit and support the organizational
needs. Owe to the differences of industry and organizational status, some low fitness ERP
packages may leads to business downturn in specific enterprises.
Moreover, costs and time are the basic units of an ERP project. The project implementation
factors dealt with the costs, time and development technology of ERP project. When the
Chinese SMEs evaluate the ERP packages, they lay high stress on the total costs of ERP
solutions. It not only includes the price of purchasing ERP packages, but also the training
and maintaining fees. Due to the limitation of human and finical resources, most of them
could not accept a over-budget ERP packages even it could provide “perfect” services. In
contrast, the develop technology was perceived as less important in ERP packages
evaluation. They tended to outsource these modules to third parties if any business
requirements appear. And the most suitable time of ERP project implementation is from 6
months to 12 months.
The system factors consist of user friendliness, system reliability and system compatibility.
Owing to the lacks of IT experiences and knowledge, the end-users emphasize on the user
friendliness of ERP packages. They expected that the new ERP systems are easy to learn
and operate. Further, the top management focused on evaluating the system reliability
which is important to confirm the business running in a correct way. The evaluations of
vendor are including vendor position and the quality of after sales services. In this aspect,
the experiences and suggestions from decision makers’ friends or relatives would
dramatically influences the decision making of ERP packages selection. Finally, the
consultancy, which was defined as external factors, is very crucial to the enterprises which
are lacking of IT experiences and employees. They could provide comprehensive and
scientific suggestions for ERP packages selection.
43
5.2 Limitation
There are two major limitations of this study. The first limitation is come from the
weakness of the research methodology. Owing to the limitation of time and resources, a
single case study was employed in this study. Although the case in this study is a typical
small and medium sized manufacturing enterprise in China, the findings may not be
strongly reliable in a whole Chinese SMEs context. Another limitation is comes from the
nature of this research. Due to the cultural background of case company, all the interviews
data were collected in Chinese and then translate into English. Despite the MSc researcher
is extremely cautious in translations, some meanings of qualitative data may be lost after
the translations.
5.3 Further Research
Due to the limitation of time, this dissertation only focus on the decision making processes
and particularly identify and explore the evaluation criteria of Chinese SMEs select ERP
packages. Nevertheless, the MSc researcher found that some factors may affect the whole
processes of ERP selection during the research. For example, the limitation of finical and
human resources may determine their budget on ERP project and thus influences the
evaluation of ERP packages. As a result, the further research can be focus on the potential
factors affecting the ERP selection in Chinese SMEs. It will promote the understandings
between ERP vendors and enterprises and thus ERP vendors could provide more suitable
ERP products for Chinese SMEs.
(Word Count: 12665)
44
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Appendix I interview script
Interview to CEO
1. Could you please introduce some basic information about your company, for example,
organizational structure, the main business, business processes.
2. From some surveys to Chinese SMEs, I found that there is a few enterprises have the
experiences of using information systems. So why did your company decide to
implement ERP systems? For its advantages or another reasons?
3. During the process of ERP packages selection, what are the three evaluation criteria you
considered as most important?
Follow-up: Why do you think they are important?
4. Apart from these criteria, I expected to gain your viewpoints about other evaluation
criteria. I had classified them into four groups: vendor criteria, project implementation
criteria, organization criteria, system criteria. What detail criteria would you consider
when you evaluate the ERP solution?
Follow-up: why do you select it as evaluation criteria?
5. Which evaluation criteria is the least important as you identified above? Why?
6. According to the researches of western countries, I find some factors(XXXX) have been
identified as evaluation criteria. However, you did not mention them. Do you think it is
important for Chinese SMEs? Why?
7. Is there anything else you would like to add?
51
Interview to IT manager
1. What is your role in the company?
Follow-up: what is your daily routine?
2. Could you please introduce the composition of project team? What is the responsibility
of each role?
3. How did the project team make the decisions? Whose ideas have the most conclusive
influence?
4. According to your experiences and knowledge, which three evaluation criteria you
considered as most important during the process of evaluating ERP packages?
5. Could please introduce other criteria would you select as evaluation criteria?
Follow-up: why do you select it as evaluation criteria?
6. Which evaluation criteria is the least important as you identified above? Why?
7. Base on our theoretical frame, I found that references of vendor, domain knowledge of
vendors, system flexibility and fit with parent organization systems factors did not been
mentioned during the interviews. Do you think it is important for Chinese SMEs?
8. Is there anything else you would like to add?
52
Interviews to end-users (sales department, accounting department,
manufacturing department)
1. What is your role in the company?
Follow-up: what is your daily routine?
2. Did you have the experiences of using computer and computer-based information
systems?
3. I heard that your company is planning to implement ERP systems. What influences do
you expect from ERP implementation?
Follow-up: So, what are the main difficulties do you think when you are using ERP
systems?
4. During the process of ERP packages selection, what are the three evaluation criteria you
considered as most important?
5. Apart from these criteria, I expected to gain your viewpoints about other evaluation
criteria. I had classified them into four groups: vendor criteria, project implementation
criteria, organization criteria, system criteria. What detail criteria would you consider
when you evaluate the ERP solution?
Follow-up a: why do you select it as evaluation criteria?
Follow-up b: Do you want to add other criteria expect these types?
6. Which evaluation criteria is the least important as you identified above? Why?
7. Base on our theoretical frame, I found that XX factors did not been mentioned during
the interviews. Do you think it is important for your company?
8. Is there anything else you would like to add?
53
Interview to IT specialist
1. What is your role and responsibility in the project team?
Follow-up: Can you affect the decision during the ERP selection in the company?
2. Which criteria would you proposed for ERP systems evaluation in the company?
Follow-up: In view of previous interviews, I identified a list of evaluation criteria in
Chinese SMEs. Could you give some advices about these criteria? For example, add or
remove someone.
3. According to the researches of western countries, I found some differences of
evaluation criteria between western enterprises and Chinese SMEs. Could you please
introduce the reasons of this phenomenon base on your past experiences and
researches
4. Is there anything else you would like to add?
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Appendix II Final Coding Scheme with themes
Code ID Definition
Lack of the understanding of business strategy
M1 Texts about the understanding of end-users on enterprise’ business strategy
System disaster M2 Texts about unexpected breakdown or errors of systems
Legacy systems M3 Texts about the information systems which are used to support current business process
Needs of Integration M4 Texts about the needs of integrating with legacy systems
Vendor credits M5 Texts about whether the ERP vendors provide promised services
Project budget M6 Texts about the expectations on the costs of project
Top management attitudes M7 Texts about the influences to decision making from the top management
In-house development M8 Texts about the development requirements for meeting changeable business environment
Lack of IT employees M9 Texts about the IT status of Chinese SMEs
Lack of IT experiences M10 Texts about the IT status of Chinese SMEs
Code ID Definition
Promote business performances
O1 Texts about the effects of ERP implementation
technological infrastructure and supportive staff
O2 Texts about the foundation of ERP vendors provide after sales services
Reduction of customization O3 Texts about the reasons of choosing more functional fit ERP systems
Reduction of BPR O4 Texts about the reasons of choosing more functional fit ERP systems
Support daily work O5 Texts about the functions of ERP systems
Awareness of mistakes O6 Texts about the errors made by the system itself
Friends or relatives suggestion
O7 Texts about friends or relatives’ experiences on specific vendors
Ease of learning O8 Texts about the ERP system whether difficult to learn
Ease of operating O9 Texts about the ERP system whether difficult to operate
Interface friendliness O10 Texts about the friendliness of operating interface
Implementation risks O11 Texts about the risks of ERP project implementation
Domain knowledge and experiences
O12 Texts about the knowledge and experiences on implementing ERP systems in specific industry
Business downturn O13 Texts about business downturn in SMEs
Unreliable solutions O14 Texts about whether the capacity of vendors could provide a suitable solution.
Business downturn O15 Texts about business downturn in SMEs
Comprehensive evaluation O16 Texts about the role of consultants on ERP selection
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theme ID Code of evaluation factor
Definition Link with Code Issues influences
Organizational factors
E1 Fit with business strategy
Texts about ERP packages support enterprise business strategy
M1
O1
E2 System Functionality
Texts about the functional modules provided and functional support with business process
M10 O3,O4 O5
System factors E3 System compatibility
Texts about the compatibility with legacy systems
M3,M4
E4 User friendliness Texts about the ease of learning and ease of operating
M10 O8,O9, O10
E5 System Reliability Texts about the reliability of ERP systems
M2 O6
Project implementation factors
E6 Total costs Texts about the costs of purchasing, implementation, training, maintaining
M5,M6 M7
O11,
E7 Development technology
Texts about specifics of hardware and software using in developing ERP systems
M8,M9 M6
E8 Implementation time
Texts about the time of implementation ERP systems
O13 O14
Vendor factors E9 Vendor’s position Texts about the market position and reputation of vendor
M10 O12
E10 After sales services Texts about the services provide after the sales of ERP packages
E9,M5 O2 O7
External factors E11 Consultancy Texts about external entities employed support the decision of ERP selection
M9,M10 O16
56
Appendix III Example of Concept Map for project
implementation factors
Project
implementation
factors
Total
costs
Lack of IT
employees
Business downturn
Implementa
tion time
Development
technology
Top management
attitudes
Vendor
credits
Implementa
tion risks
In-house
developmen
t
Project
budget
Unreliable solutions Theme
Factors
Issues
Influences
57
University Research Ethics Application
Form
for Undergraduate & Postgraduate-Taught
Students
This form has been approved by the University Research Ethics Committee (UREC)
Complete this form if you are an undergraduate or a postgraduate-taught student who plans to undertake a research project which requires ethics approval via the University Ethics Review Procedure.
Your Supervisor decides if ethics approval is required and, if required, which ethics review procedure (e.g. University, NHS, Alternative) applies. If the University’s procedure applies, your Supervisor decides if your proposed project should be classed as ‘low risk’ or potentially ‘high risk’. *PLEASE NOTE THAT YOUR DEPARTMENT MAY USE A VARIATION OF THIS FORM: PLEASE CHECK WITH THE ETHICS ADMINISTRATOR IN YOUR DEPARTMENT*
This form should be accompanied, where appropriate, by all Information Sheets / Covering Letters / Written Scripts which you propose to use to inform the prospective participants about the proposed research, and/or by a Consent Form where you need to use one.
Further guidance on how to apply is at: www.sheffield.ac.uk/ris/other/gov-ethics/ethicspolicy/approval-procedure/review-procedure
Guidance on the possible routes for obtaining ethics approval (i.e. on the University Ethics Review Procedure, the NHS procedure and the Social Care Research Ethics Committee, and the Alternative procedure) is at: www.sheffield.ac.uk/ris/other/gov-ethics/ethicspolicy/approval-procedure/ethics-approval
58
Once you have completed this research ethics application form in full, and other documents where appropriate, check that your name, the title of your research project and the date is contained in the footer of each page. If your Supervisor has classed the project as ‘low risk’:
Email this form, together with other documents where applicable, to your Supervisor; and
Sign and date Annex 1 of this form and provide a paper copy to your Supervisor.
Important Note for Supervisors: Following the ethics review the Supervisor must provide the academic department’s Ethics Administrator with a copy of the ‘low risk’ research ethics application that s/he reviewed and a completed Ethics Reviewer’s Comments Form indicating the ethics decision that s/he took in relation to it. The Ethics Reviewer’s Comments Form can be downloaded here: www.sheffield.ac.uk/ris/other/gov-ethics/ethicspolicy/further-
guidance/universityprocedure2/reviewersc The Ethics Administrator reserves the right to consult the Chair of the academic department’s Ethics Review Panel (or equivalent) of
s/he has concerns that projects classed as low risk should in fact have been classed as potentially high risk.
If your Supervisor has classed the project as potentially ‘high risk’:
Email this form, together with other documents where applicable, to your department’s Ethics Administrator; and
Ask your Supervisor to sign and date Annex 2 of this form and provide a paper copy of it to your department’s Ethics Administrator.
Ethics Administrators are listed at: www.sheffield.ac.uk/polopoly_fs/1.99105!/file/Ethics-Administrators.pdf
University Research Ethics Application Form
for Undergraduate & Postgraduate-Taught Students
I confirm that I have read the current version of the University of
Sheffield
‘Ethics Policy Governing Research Involving Human Participants, Personal
Data and Human Tissue’, as shown on the University’s research ethics website
at: www.sheffield.ac.uk/ris/other/gov-ethics/ethicspolicy
59
A1. Title of research project: How do Chinese SMEs select their ERP packages?
A case study of a Chinese manufacturing Enterprise
A2. Name of Student: Haibing Li
Department: Information School Email: [email protected] Tel.: 07427674658
Name of Supervisor: Alex Peng A3. Proposed Project Duration:
Start date: 01/06/2012 End date: 02/09/2012
A4. Mark ‘X’ in one or more of the following boxes if your research:
involves adults with mental incapacity or mental illness
involves prisoners or others in custodial care (e.g. young offenders)
involves children or young people aged under 18 years
involves using samples of human biological material collected before for another purpose
involves taking new samples of human biological material (e.g. blood, tissue) *
involves testing a medicinal product *
involves taking new samples of human biological material (e.g. blood, tissue) *
involves additional radiation above that required for clinical care *
involves investigating a medical device *
* If you have marked boxes marked * then you also need to obtain confirmation that
appropriate University insurance is in place. To do this email [email protected] and request a copy of the ‘Clinical Trial Insurance Application Form’.
It is recommended that you familiarise yourself with the University’s Ethics Policy Governing Research Involving Human Participants, Personal Data and Human Tissue before completing the following questions. Please note that if you provide sufficient information about the research (what you intend to do, how it will be carried out and how you intend to minimise any risks), this will help the ethics reviewers to make an informed judgement quickly without having to ask for further details.
A5. Briefly summarise:
i. The project’s aims and objectives:
(this must be in language comprehensible to a lay person)
60
It aims to examine how the critical factors affecting the decision making processes in Chinese SMEs’. It will promote the understanding between ERP vendors and SMEs so that vendors could adjust their ERP packages for SMEs.
ii. The project’s methodology:
(this must be in language comprehensible to a lay person)
Apply multiple data collection methods include questionnaires and interviews to analyze the case company.
A6. What is the potential for physical and/or psychological harm / distress to participants?
There is no potential harm to participants. A7. Does your research raise any issues of personal safety for you or other
researchers involved in the project? (especially if taking place outside working hours or off University premises)
No.
If yes, explain how these issues will be managed.
61
A8. How will the potential participants in the project be:
i. Identified?
I have already identified the participants.
ii. Approached?
iii. Recruited?
A9. Will informed consent be obtained from the participants?
YES X NO
If informed consent or consent is NOT to be obtained please explain why. Further guidance is at: www.sheffield.ac.uk/ris/other/gov-
ethics/ethicspolicy/policy-notes/consent
A9.1. This question is only applicable if you are planning to obtain informed consent:
62
How do you plan to obtain informed consent? (i.e. the proposed process?): A10. What measures will be put in place to ensure confidentiality of personal
data, where appropriate? The personal data from participants will be deleted after this research. A11. Will financial / in kind payments (other than reasonable expenses and
compensation for time) be offered to participants? (Indicate how much and on what basis this has been decided)
No. A12. Will the research involve the production of recorded media such as audio
and/or video recordings?
YES X NO
A12.1. This question is only applicable if you are planning to produce recorded media:
How will you ensure that there is a clear agreement with participants as to how these recorded media may be stored, used and (if appropriate) destroyed? All the recorded media just used to collect data. I will promise to delete these recorded media after the finish of research.
63
Guidance on a range of ethical issues, including safety and well-being, consent and anonymity, confidentiality and data protection’ are available at: www.sheffield.ac.uk/ris/other/gov-ethics/ethicspolicy/policy-notes
For Undergraduate & Postgraduate-Taught
Students
Student Declaration
(The student completes Annex 1 if the Supervisor has classed the student’s proposed research project as ‘low risk’)
The Supervisor needs to receive an electronic copy of the form, and other documents where appropriate, plus a signed, dated paper copy of this Annex 1 ‘the Student Declaration’.
Full Research Project Title: How do Chinese SMEs select their ERP
packages? A case study of a Chinese manufacturing Enterprise
In signing this Student Declaration I am confirming that:
The research ethics application form for the above-named project is accurate to the best of my knowledge and belief.
The above-named project will abide by the University’s ‘Good Research Practice Standards’: www.sheffield.ac.uk/ris/other/gov-ethics/good
The above-named project will abide by the University’s ‘Ethics Policy Governing Research Involving Human Participants, Personal Data and Human Tissue’: www.sheffield.ac.uk/ris/other/gov-ethics/ethicspolicy
Subject to the above-named project being ethically approved I undertake to adhere to any ethics conditions that may be set.
I will inform my Supervisor of significant changes to the above-named project that have ethical consequences.
64
I will inform my Supervisor if prospective participants make a complaint about the above-named project.
I understand that personal data about me as a researcher on the research ethics application form will be held by those involved in the ethics review process (e.g. my Supervisor and the Ethics Administrator) and that this will be managed according to Data Protection Act principles.
I understand that this project cannot be submitted for ethics approval in more than one department, and that if I wish to appeal against the decision made, this must be done through the original department.
Name of Supervisor: Alex Peng
Name of student: Haibing Li
Signature of student: Haibing Li
Date: 29/06/2012
For Undergraduate & Postgraduate-Taught
Students
Supervisor Declaration (The Supervisor completes Annex 2 if s/he has classed the
student’s proposed research project as potentially ‘high risk’) The Ethics Administrator needs to receive an electronic copy of the form, and other documents where appropriate, plus a signed, dated paper copy of this Annex 2 ‘the Supervisor Declaration’.
Full Research Project Title: insert name
65
In signing this Supervisor Declaration I am confirming that:
The research ethics application form for the above-named project is accurate to the best of my knowledge and belief.
The above-named project will abide by the University’s ‘Good Research Practice Standards’: www.sheffield.ac.uk/ris/other/gov-ethics/good
The above-named project will abide by the University’s ‘Ethics Policy for Research Involving Human Participants, Data and Tissue’: www.sheffield.ac.uk/ris/other/gov-ethics/ethicspolicy
Subject to the above-named project being ethically approved I will undertake to ensure that the student adheres to any ethics conditions that may be set.
The student or the Supervisor will undertake to inform the Ethics Administrator of significant changes to the above-named project that have ethical consequences.
The student or the Supervisor will undertake to inform the Ethics Administrator if prospective participants make a complaint about the above-named project.
I understand that personal data about the student and/or myself on the research ethics application form will be held by those involved in the ethics review process (e.g. the Ethics Administrator and/or reviewers) and that this will be managed according to Data Protection Act principles.
I understand that this project cannot be submitted for ethics approval in more than one department, and that if I and/or the student wish to appeal against the decision made, this must be done through the original department.
Name of Supervisor: insert name
Name of student: insert name
Signature of Supervisor: sign here
Date: insert date
66
Guidance on completing an Information Sheet
An information sheet should help a person to make an informed choice regarding
whether or not to participate in a research project. Therefore, an information sheet
should provide sufficient information to enable potential recruits to make an
informed choice and should clearly state that participants are free to withdraw at
any time.
Researchers should take the steps necessary to ensure that all participants in the research
(a) understand the process in which they are to be engaged, including why their
participation is necessary and (b) understand the purpose of the research and how and to
whom its research findings will be reported.
It is recommended that the content of an information sheet is:
relevant to the proposed research.
accurate and concise.
clear, simple and understandable from a lay person’s perspective (e.g. avoids jargon).
presented on the headed paper of the institution carrying out the research.
appropriate for the cultural and social context in which it is being given.
It is recommended that the content of an information sheet does not include:
any abbreviations, jargon or technical terms.
bias or coercion or any inappropriate inducements.
How long should an information sheet be?
Information sheets should only contain relevant information that a reasonable person
would want to know (i.e. in order to decide whether or not to participate in a research
project). It is recommended that, where appropriate, an information sheet contains
information in the order specified under the headings given overleaf.
The length and design of an information sheet should encourage a prospective
participant to read it in full. A participant may take more care when reading a concise
information sheet and, thereby, be better informed than if s/he has to read an information
sheet that runs into several pages. However, with respect to projects that involve
‘particularly vulnerable’ participants and/or which require access to ‘sensitive’ personal
data the information sheet may need to be relatively longer in order to cover more
detailed information.
67
Note on Human Tissue:
If your research project involves access to and use of human tissue it is advised that you
consult the Medical Research Council’s (MRC) guidance fact-sheet ‘Human tissue and
biological samples for use in research’: www.mrc.ac.uk/pdf-tissue_guide_fin.pdf
Please Turn Over
Model Information Sheet
1. Research Project Title:
How do Chinese SMEs select their ERP packages? A case study of a Chinese
manufacturing Enterprise
2. Invitation paragraph
You are being invited to take part in a research project. Before you decide it is important
for you to understand why the research is being done and what it will involve. Please
take time to read the following information carefully and discuss it with others if you
wish. Ask us if there is anything that is not clear or if you would like more information.
Take time to decide whether or not you wish to take part. Thank you for reading this.
3. What is the project’s purpose?
It aims to examine how the critical factors affecting the decision making processes in
Chinese SMEs’. It will promote the understanding between ERP vendors and SMEs so
that vendors could adjust their ERP packages for SMEs.
The duration of project is 4 months.
4. Why have I been chosen?
In order to evaluate the ERP selection situations of your company, you have been chose
as a member of participants. There are about 15 persons will attend our research.
5. Do I have to take part?
It is totally voluntary. You can decide whether attend our research by yourself. You will
not get any penalty or loss if you do not want to take part in our research.
6. What will happen to me if I take part?
You need to finish a online questionnaire about the situation of ERP selection. It
possibly cost half hour to an hour.
68
7. What do I have to do?
There is no lifestyle restriction as a result of participating.
8. What are the possible disadvantages and risks of taking part?
There is no any disadvantages and risks of taking part.
9. What are the possible benefits of taking part?
Whilst there are no immediate benefits for those people participating in the project, it is
hoped that this work will promote the understanding between ERP vendors and SMEs so
that vendors could adjust their ERP packages for SMEs.
10. What happens if the research study stops earlier than expected?
There is nothing will happens.
11. What if something goes wrong?
In my idea, this research is very easy. You just present your considerations of our
questionnaire. You can give suggestions or feedbacks to Principal Investigator if you
feel uncomfortable to finish our questionnaire.
12. Will my taking part in this project be kept confidential?
All the information that we collect about you during the course of the research will be
kept strictly confidential. You will not be able to be identified in any reports or
publications.
13. What type of information will be sought from me and why is the collection of this
information relevant for achieving the research project’s objectives?
Some personal data include age, education, sex. It used for gathering statistics of
participants.
14. What will happen to the results of the research project?
It is a post undergraduate student research. The data will be used as a part of research.
15. Who is organising and funding the research?
69
This research is sponsoring a student of Sheffield university.
16. Who has ethically reviewed the project?
This project has been ethically approved via information school department’s ethics
review procedure. The University’s Research Ethics Committee monitors the application
and delivery of the University’s Ethics Review Procedure across the University.
17. Contact for further information
Name: Haibing Li E-mail address: [email protected]
Telephone: 07425249954
The participant will be given a copy of the information sheet to keep.
70
Model Participant Consent Form
Title of Research Project: How do Chinese SMEs select their ERP packages? A case study of a Chinese manufacturing Enterprise Name of Researcher: Haibing Li Participant Identification Number for this project: Please initial box
1. I confirm that I have read and understand the information sheet dated [24/05/2012] explaining the above research project and I have had the opportunity to ask questions about the project.
2. I understand that my participation is voluntary and that I am free to withdraw
at any time without giving any reason and without there being any negative consequences. In addition, should I not wish to answer any particular question or questions, I am free to decline.
3. I understand that my responses will be kept strictly confidential.I give permission for members of the research team to have access to my anonymised responses. I understand that my name will not be linked with the research materials, and I will not be identified or identifiable in the report or reports that result from the research.
4. I agree for the data collected from me to be used in future research
5. I agree to take part in the above research project.
________________________ ________________ ____________________ Name of Participant Date Signature (or legal representative) _________________________ ________________ ____________________ Name of person taking consent Date Signature
71
(if different from lead researcher) To be signed and dated in presence of the participant _________________________ ________________ ____________________ Lead Researcher Date Signature To be signed and dated in presence of the participant Copies: Once this has been signed by all parties the participant should receive a copy of the signed and dated participant consent form, the letter/pre-written script/information sheet and any other written information provided to the participants. A copy of the signed and dated consent form should be placed
in the project’s main record (e.g. a site file), which must be kept in a secure location.
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