ERP SYSTEM SELECTION MODEL FOR LOW COST NGN PHONE COMPANY

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1 International Journal of Electronic Business Management, Vol. 6, No. 3, pp (2008) 153 ERP SYSTEM SELECTION MODEL FOR LOW COST NGN PHONE COMPANY Joko Siswanto 1* and Anggoro Prasetyo Utomo 2 1 Industrial Management Research Group Bandung Institute of Technology 2 Department of Industrial Engineering Harapan Bangsa Institute of Technology Bandung, West Java, Indonesia ABSTRACT Next generation network (NGN) phone company is handling telecommunication and media services in rural and sub-urban areas. In order to ease the replication process and to encourage entrepreneurship development through franchise package, ERP system needs to be deployed. Considering the widely available choices of ERP systems to date and the multi criteria decision making nature of selecting ERP, this research objected to search a model to effectively choose ERP system, thus maximizing values of implementing ERP and minimizing cost. This paper built on previous researches on ERP investment analysis and business model for village Phone Company to support entrepreneurial development in rural communities. Strategic alignment model and analytical network process were integrated to support alignment of ERP investment decision to business strategy. Strategic alignment model provides context to which ERP meets business strategy. Technology potential alignment perspective was used for Low Cost NGN Phone Company. This alignment perspective provides control hierarchy for the analytic network process. Analytic network process enables the model to incorporate multi-criteria decision making and derive priorities from complex structure. Three clusters with total of nine elements with dependence and feedback among the elements were used. Three ERP alternatives were compared, the open source ERP was found as the best alternative for Low Cost NGN Phone Company. Evaluation was based on the business strategy, IT strategy, and information system infrastructure and process. Keywords: ERP Selection, Strategic Alignment Model, Analytic Network Process 1. INTRODUCTION NGN Phone Company is a model of telecommunication and media services, built to extend the last mile of telecommunication and media services into the unpenetrated village and sub-urban areas of Indonesian city [10]. Indonesia is populated by 245 millions people that only have approximately 5% penetration ratio for fixed telephony, and approximately 20% penetration ratio for mobile telecommunication. This fact is due to the vast distribution of population over a very wide geographical area. NGN Phone Company with its technology can be a potential solution to address this issue. Not only does NGN phone company help to increase the telecommunication penetration ratio but it also promotes entrepreneurial development in the rural areas. This is possible due to the low cost nature of NGN phone company operation. This in turn can promote the local financial prosperity, hence having a positive effect on rural economic situation. Difusion of technology resulted from a research into a business and furthermore an industry, covers three major elements: the hardware, the human resource, and the soft system. The hardware is the hard technology itself being difused. The human resource will provide the leadership and entrepreneurial aspect. The soft system will act as the business system. The ERP reflects the business system that is being used in the company. The adoption of ERP system will encourage entrepreneurship development through franchise package. This will make business replication much easier. Previous research also suggests that the business model of low cost NGN phone works best * Corresponding author:

2 154 International Journal of Electronic Business Management, Vol. 6, No. 3 (2008) with franchise approach. Using a franchise approach, the company can expand rapidly without having to invest a substantial amount of money. Instead, the company lets the franchisees provide the investments. Given the nature of franchise business, Low Cost NGN Phone Company is expected to grow at a substantial rate into a company with large scale operations in terms of geographical coverage and number of clients. Having a large scale operation and wide area coverage, it usually means high operating cost. In order to keep a low cost, the company needs to make sure that its operations are conducted in the most efficient way, yet preserving the effectiveness. In order to support efficiency of operations, computerized enterprise system needs to be deployed inside the company. Enterprise resource planning (ERP) is the most likely solution to address the problem. ERP has been found to give numerous advantages in multiple aspects of the company, such as operational, managerial, strategic, IT infrastructure, and organizational aspects [8]. It will help entrepreneur to manage business unit faster and easier, resulting in better costumer services and faster managerial reporting specifically financial reports of Phone Company. In general, ERP can cut costs and raise outputs by automating basic, repetitive operations. It can speed up processes, substitute labor, and increase operation volume. With its centralized database and built-in data analysis capabilities, ERP can create managerial benefits such as: better resource management, improved decision making, and performance improvement. An integrated information system also creates strategic benefits by supporting business growth and innovation. However, ERP does come with various issues that can even cause a company to collapse [12]. Some of these issues are implementation complexity, integration problems, customization problems, over budget, late projects, organizational change, problems with business strategy and competitive advantage. Al-Mashari reported that 70% of ERP implementations did not achieve their estimated benefits. One addressable cause underlining the failure of ERP implementation is choosing the ERP system that does not meet the needs of the business. One reason behind this issue is lack of formal procedure to make decisions on which ERP to choose [2][3]. Availability of various kinds of ERP systems in the market also adds to the complexity of choosing ERP system. This paper attempts to present selection method to choose the most suitable ERP system for low cost NGN Phone Company based on the model proposed by Presley [6] and Shyur [9]. To show the methodological process, the data were adopted based on three different alternatives which can be categorized as open source ERP, branded ERP, and custom build ERP. The information of the first two alternatives was gathered from available sources such as ERP documentation, marketing information (printed material and online information), user experiences, and also expert judgment. 2. ERP SELECTION ISSUES AND METHODOLOGY Being a substantial amount of investment, every company that implements ERP will hope that it will bring financial and competitive benefits to the company. Nonetheless, many companies experienced disappointment. ERP failed to bring them what they desired. Venkatraman and Henderson [3] argued that the failure to gain benefits from ERP investment is due to lack of alignment between business strategy and IT strategy. To be able to create financial and competitive benefits from ERP investment, business strategy and IT strategy should be synchronized. This way, business and IT can create synergy in operations and drive the company on top of the competition. Even when business and IT strategy has been aligned, choosing the suitable ERP can still be a serious problem. The market has been flooded with enterprise solutions in the recent years. Every package offer their own values and characteristics, but not all of them will be suitable for the company. As a matter of fact, the company has to choose only one that is considered the most suitable. This is not a simple task. There are many ways that companies have used to select ERP system. The simplest way to select ERP system is to consider the available budget and technical requirements. Some websites provide ERP system evaluation based on budget, functional requirements, and technical requirements. The result is shortlisted candidates that meet the requirements. The user needs to further evaluate the short listed candidates before choosing the final selection. This method leaves user without any formal procedure to evaluate the short listed candidates. This kind of approach is a supplier-side approach. The approach is designed to maximize the potential of the supplier. The user is dictated to evaluate the alternatives according to the predetermined criteria that are intended to show the strength of their products. It does not provide a way for the user to evaluate the alternatives according to the user-defined criteria. The outcome can be biased, resulting in what the supplier wants, not what the company needs. Other companies hire consultant to select ERP system that suits them best. This way, the company let the consultant use any methodology that they deem acceptable. All the company concern is the

3 J. Siswanto and A. P. Utomo: ERP System Selection Model for Low Cost NGN Phone Company 155 recommended ERP system, with little knowledge, if any, about the evaluation process and the characteristics of the proposed alternatives. It is realized that selecting ERP system is not only a matter of budget, functionality, and technical requirement. There are many factors, other than the ones described earlier, need to be considered. As a matter of fact, these other factors are known to play a vital role in the success of ERP implementation [11][5]. Issues like human resistance, business complexities, and other organizational issues are examples of common obstacles in ERP implementation. ERP implementation project neglecting these non-technical issues usually leads to project failures. In other words, the process to evaluate an ERP system is complex in nature. This condition calls for a comprehensive approach to evaluate an ERP system. ERP system evaluation needs to consider all aspects involved in the operation of the ERP system. It is also known that often evaluation of non-technical factors can only be done qualitatively, while technical issues can be evaluated quantitatively. Hence, we must develop an integrated approach that combines evaluation for both technical and non-technical issues. This kind of approach may seem tedious, but the result is worth the effort. It can be called a user-side approach that tries to maximize the fit of the business with the proposed solution. With this approach, the evaluation process can be free of any non-neutral effect from any suppliers, hence ensuring that the proposed solution is the real answer of the company needs. Figure 1: Strategic alignment model [3] Many researchers have started to develop various models to evaluate ERP system [4][6][9]. This paper attempts to develop model for selecting ERP system using the strategic alignment model and analytic network process. The strategic alignment model will ensure the alignment of IT strategy and business strategy, while the analytic network process handles the complexity of choosing many alternatives based on many interdependence criteria. Many criteria have been suggested by researchers [2][9]. These criteria have been used by many companies to select ERP system that is most suitable for them. Some of these criteria are: cost, increased transparency and better information flow, adaptability and flexibility of the software, market position of vendor, good support from vendor, closeness of fit to the company s business, ease of implementation, and system integration, Choosing one among many alternatives of ERP systems according to that many criteria is a complex task. Moreover, the criteria are not independent. A criterion affects other and also receives feedback from other criterion. Instead of hierarchical, the relationship between the criteria is more like a network. This makes the decision even more complicated. The analytic network process [7] based on the strategic alignment model [3] is possible to provide a method to correctly choose an ERP system that suits the company s business needs. 3. STRATEGIC ALIGNMENT MODEL Venkatraman, Henderson, and Oldach [3] proposed a methodology to align business strategy and IT strategy. The methodology is called strategic alignment model (SAM). They believe that lack of alignment between business and IT strategy as well as lack of dynamic administrative process to ensure continuous alignment, greatly contribute to companies failures in realizing the benefits of ERP. SAM consists of four domains, which are business strategy domain, organization infrastructure and processes domain, IT strategy domain, and information system infrastructure and processes domain. Figure 1 shows the four domains and their relationships. They describe four dominant alignment perspectives towards analytic alignment of business and IT. Every alignment perspective consists of only three domains. The first alignment perspective is strategy execution which consists of business strategy, business infrastructure and processes, and IT infrastructure and processes. This perspective views business strategy as the driver. The business strategy then determines the organizational design and IT infrastructure needed to carry out the strategy. The second alignment perspective is technology potential which consists of business strategy, IT strategy, and IT infrastructure and processes. This perspective also considers business strategy as the driver. It is different from the first perspective in the formulation of IT strategy needed

4 156 International Journal of Electronic Business Management, Vol. 6, No. 3 (2008) to support the business strategy. The IT infrastructure is derived from the IT strategy. The third alignment perspective is competitive potential which consists of IT strategy, business strategy, and business infrastructure and processes. This perspective allows modification of business strategy through emerging IT capabilities. New business scope and distinctive competencies can be made possible through exploitation of emerging IT capabilities. The fourth alignment perspective is service level which consists of IT strategy, IT infrastructure and processes and business infrastructure and processes. In this perspective IT strategy plays the main role. The focus is to create a world class IT organization within an organization. 4. ANALYTIC NETWORK PROCESS Decision making is an important process, especially when the decision involves the future of the company. One would make a cautious approach when faced with such an important decision. Choosing the ERP system to implement in the company is a very important decision. It because not only involves substantial resources to be invested, but also affects the profitability of the company in the long run. Furthermore, the criteria to make the decision are so many and dependent on each other, that it is no longer possible to use the conventional scoring approach to evaluate the alternatives. When it comes to decide what alternative to choose among many alternatives and the decision involves many criteria to consider, then it will be best if decision making tools are used, such as analytic hierarchy process (AHP). Drawback of using AHP is the inability to consider dependence and feedback among the component. Normally, many decisions in real life situation will involve dependence and feedback, hence creating network-like structure instead of hierarchic structure. Analytic network process (ANP) is a general version of AHP. Using ANP, the dependence and feedback among the elements can be considered and evaluated appropriately [7]. ANP uses supermatrix to show the impact of each criterion to the others. This supermatrix is then made into stochastic matrix by weighting using the cluster weights matrix obtained from the control hierarchy. The weighted supermatrix is then raised to power until it stabilizes. The eigenvector from the final matrix describes the priority for each criterion. (1) Equation (1) shows the formation of supermatrix. Assume that component h denoted by C h, h = 1,..., N, has n h elements, which we denote by e h1, e h2,..., e hnh. The impacts of a given set of elements in a component on another element in the system is one represented by ratio scale priority vector derived from paired comparison in the usual way, where the i,j block of this matrix is given by Equation (2): (2) Due to the constraint in the total number of pages, detailed mathematical explanation will not be presented here. One can find the detail mathematical explanation of ANP inside the book Decision making with dependence and feedback by Saaty [7]. 5. RESEARCH METHODOLOGY This research began with reviewing the current research work and literature about ERP selection method. Once the method to choose ERP was selected, the research proceeded to identify the criteria that most companies used in choosing their ERP. This was also done by researching the literature and case studies. After the criteria were identified, the next step was to choose which criteria were appropriate for Low Cost NGN Phone Company. This was done by analyzing the business nature of Low Cost NGN Phone Company. Afterwards, to show the methodological process, a case study was applied. The objective of the case study was to select the most suitable ERP system for low cost NGN Phone Company from three available alternatives.

5 J. Siswanto and A. P. Utomo: ERP System Selection Model for Low Cost NGN Phone Company 157 Later, the three candidates were processed with the proposed ERP selection method. Previously identified criteria were considered to choose the ERP that meets the business strategy of Low Cost NGN Phone Company. 6. ERP SELECTION MODEL In this section, thorough explanations about the model used to choose ERP system will be given. As was stated in the previous section, a literature study was conducted to find the criteria used by most companies in choosing their ERP system. Previous research by Benroider and Koch [1] showed that there are differences in terms of criteria used to choose ERP system between small-midsize and large companies. Shyur [9] also listed some criteria to use when evaluating ERP systems. These criteria were then analyzed to identify criteria that are suitable to Low Cost NGN Phone Company. The resulting criteria are: cost, supplier support, technological opportunity, closeness of fit to the company business, ease of implementation, flexibility and adaptability to change, system integration, increased organizational flexibility, and increased transparency and better information flow. Table 1: Clusters and the elements Clusters Elements 1 Cost Business Strategy 2 Flexibility and adaptability to change 3 Increased organizational flexibility 4 Technological opportunity IT Strategy 5 Closeness of fit to the company 6 Supplier support 7 Ease of implementation IT Infrastructure and Processes 8 System integration 9 Increased transparency and better information flow Figure 2: Dependence and feedback among clusters Based on SAM framework, the suitable alignment perspective for low cost NGN Phone Company is technology potential alignment. This perspective is chosen because the low cost NGN phone company is market-driven in nature. The company exists because there are great demands in sub-urban areas for telecommunication. Therefore, business strategy needs to take the first place to be considered. The IT strategy follows the business strategy since Low Cost NGN Phone Company needs a strong support to execute an effective and efficient business operation. The organizational infrastructure and processes domain are omitted as every alignment perspective only consists of three domains. This can be logically explained because NGN phone company is a new company. Hence organizational infrastructure and processes are minimal compared to other well established company. Organizational infrastructure and processes can be adjusted accordingly to the technology potential alignment of SAM framework. This perspective views the business strategy as the driver. The IT strategy is formulated to support the chosen business strategy and the corresponding specification of the required IT infrastructure and processes [3]. A technology potential alignment perspective allows companies to integrate business strategy and IT strategy. This is the most critical relationship. Using this alignment perspective, the criteria are then grouped into the appropriate cluster. The clusters are business strategy, IT strategy, and IT infrastructure and processes. Business strategy cluster consists of three criteria: cost, flexibility and adaptability to change, and increased organizational flexibility. The cost criterion represents expenses that will be incurred if the company implements the strategy. It consists of cost of initial investment, cost of maintenance, and cost of operation. The flexibility and adaptability to change criterion represents the ability of the company to change according to the business needs. It consists of future business

6 158 International Journal of Electronic Business Management, Vol. 6, No. 3 (2008) opportunity, market growth, change of product and services, and technological changes. The increased organizational flexibility represents the ability of the organization to change accordingly. It consists of structure flexibility, system flexibility, business process flexibility, and people skill flexibility. IT strategy cluster consists of two criteria: technological opportunity and closeness of fit to the company. The technological opportunity criterion represents the opportunities that can be created by implementing a particular technology. It consists of ERP development direction and development difficulty level. The closeness of fit to the company criterion represents the degree of fit between ERP and company s business process. It consists of compatibility of technology, process fit, and security fit. IT infrastructure and processes consists of four criteria: supplier support, ease of implementation, system integration, and increased transparency and better information flow. The supplier support criterion represents the availability of support from the supplier. It consists of availability of support in local region, service support lead time, and service price. The ease of implementation criterion represents the degree of difficulty of implementation process. It consists of ease of configuration, and ease of operation. The system integration criterion represents the degree of connectivity among related process. The increased transparency and better information flow criterion represents the quickness of response that can be given regarding an event or information. Table 1 shows the grouping of criteria into each cluster. Elements and clusters that have been identified in the table will be used to select the most suitable ERP for low cost NGN Phone Company using the ANP technique. The dependence and feedback between the clusters follows these relationships: Business strategy will have impacts to IT strategy. IT strategy determines the IT infrastructure and processes adopted by the company, and at the same time giving feedback to business strategy. IT infrastructure and processes will create feedback to IT strategy. Figure 2 depicts the dependence and feedback of the clusters, hence creating the control hierarchy for the ANP approach. This control hierarchy will be used to create a stochastic matrix from the supermatrix. 7. EVALUATION Based on the model explained in the previous section, a quantitative evaluation using the ANP technique will be conducted. The first thing to do when using the ANP approach is to pairwise compare the criteria to each other with respect to each element. Pairwise comparison was done by asking questions to low cost NGN phone company experts. Question example is: With respect to cost, rate the importance of these two criteria, technological opportunity and closeness of fit to the company, according to scale 1 to 9, with 1 representing same importance and 9 representing extremely more important. This question is asked for every pair of criteria with respect to every dependent criterion. One pairwise comparison matrix will be created for one dependent criteria and one impacting cluster of criteria. Twelve pairwise comparison matrices were created to compare each element in each cluster to other elements in other clusters where they have impacts. Eigenvectors were obtained for every matrix by raising the powers until it stabilizes. These eigenvectors will then be the input for the supermatrix. Matrix 1: Cluster weights ,00 0,83 0,00 2 1,00 0,00 1,00 3 0,00 0,17 0,00 Matrix 2: The stochastic supermatrix ,000 0,000 0,000 0,084 0,104 0,000 0,000 0,000 0, ,000 0,000 0,000 0,562 0,431 0,000 0,000 0,000 0, ,000 0,000 0,000 0,188 0,299 0,000 0,000 0,000 0, ,800 0,833 0,333 0,000 0,000 0,250 0,143 0,750 0, ,200 0,167 0,667 0,000 0,000 0,750 0,857 0,250 0, ,000 0,000 0,000 0,037 0,091 0,000 0,000 0,000 0, ,000 0,000 0,000 0,031 0,012 0,000 0,000 0,000 0, ,000 0,000 0,000 0,085 0,039 0,000 0,000 0,000 0, ,000 0,000 0,000 0,013 0,024 0,000 0,000 0,000 0,000 The next step is to ensure that the supermatrix is a stochastic matrix, that is each column sums to unity. This can be done by evaluating the supermatrix according to a specific control hierarchy. This control hierarchy shows the weight of each cluster according to the impact they made on another cluster. The comparisons were also done in a pairwise manner. The eigenvectors obtained from the pairwise comparison of clusters will be the input for the cluster weight matrix. The cluster weights matrix is displayed in Matrix 1. This cluster weights matrix were then used to create stochastic matrix from the supermatrix. The stochastic matrix is shown in Matrix 2. Further reference for pairwise comparison process and detailed computation of eigenvectors can be found in Saaty [7]. This stochastic matrix was then raised to powers to obtain limiting priorities for each criterion. The supermatrix converged in two cycles. The converged supermatrices in its two cycles are displayed in Matrix 3. The two matrices were then averaged. The resulting eigenvectors from the

7 J. Siswanto and A. P. Utomo: ERP System Selection Model for Low Cost NGN Phone Company 159 averaged matrix show the priorities for each criterion. The averaged limiting supermatrix and the eigenvectors are displayed in Matrix 4. Matrix 3a: Converged supermatrix ,000 0,000 0,000 0,091 0,091 0,000 0,000 0,000 0, ,000 0,000 0,000 0,517 0,517 0,000 0,000 0,000 0, ,000 0,000 0,000 0,226 0,226 0,000 0,000 0,000 0, ,659 0,659 0,659 0,000 0,000 0,659 0,659 0,659 0, ,341 0,341 0,341 0,000 0,000 0,341 0,341 0,341 0, ,000 0,000 0,000 0,055 0,055 0,000 0,000 0,000 0, ,000 0,000 0,000 0,025 0,025 0,000 0,000 0,000 0, ,000 0,000 0,000 0,069 0,069 0,000 0,000 0,000 0, ,000 0,000 0,000 0,017 0,017 0,000 0,000 0,000 0,000 Matrix 3b: Converged supermatrix ,091 0,091 0,091 0,000 0,000 0,091 0,091 0,091 0, ,517 0,517 0,517 0,000 0,000 0,517 0,517 0,517 0, ,226 0,226 0,226 0,000 0,000 0,226 0,226 0,226 0, ,000 0,000 0,000 0,659 0,659 0,000 0,000 0,000 0, ,000 0,000 0,000 0,341 0,341 0,000 0,000 0,000 0, ,055 0,055 0,055 0,000 0,000 0,055 0,055 0,055 0, ,025 0,025 0,025 0,000 0,000 0,025 0,025 0,025 0, ,069 0,069 0,069 0,000 0,000 0,069 0,069 0,069 0, ,017 0,017 0,017 0,000 0,000 0,017 0,017 0,017 0,017 Matrix 4: Averaged limiting supermatrix evectors 1 0,045 0,045 0,045 0,045 0,045 0,045 0,045 0,045 0,045 0, ,259 0,259 0,259 0,259 0,259 0,259 0,259 0,259 0,259 0, ,113 0,113 0,113 0,113 0,113 0,113 0,113 0,113 0,113 0, ,330 0,330 0,330 0,330 0,330 0,330 0,330 0,330 0,330 0, ,170 0,170 0,170 0,170 0,170 0,170 0,170 0,170 0,170 0, ,028 0,028 0,028 0,028 0,028 0,028 0,028 0,028 0,028 0, ,012 0,012 0,012 0,012 0,012 0,012 0,012 0,012 0,012 0, ,035 0,035 0,035 0,035 0,035 0,035 0,035 0,035 0,035 0, ,009 0,009 0,009 0,009 0,009 0,009 0,009 0,009 0,009 0,009 Meanwhile, the alternatives were also compared with a pairwise manner with respect to each criterion. Three alternatives were chosen to represent three categories, which are the leading brand of ERP solutions, open source ERP solutions, and custom made ERP solutions. The data used to compare the alternative were based on the best estimate and judgment of the researchers taking role as consultant of Low Cost NGN Phone Company. Hence the result will adequately represent the most suitable ERP system for Low Cost NGN Phone Company. The resulting priorities of each alternative with respect to each criterion are displayed in Matrix 5. Matrix 5: Priorities for each alternative with respect to each criterion Open Source ERP 0,707 0,558 0,320 0,705 0,258 0,256 0,188 0,127 0,127 Branded ERP 0,070 0,122 0,558 0,211 0,105 0,671 0,081 0,186 0,186 Custom Build ERP 0,223 0,320 0,122 0,084 0,637 0,073 0,731 0,687 0,687 Using the alternatives priorities and the criterion priorities, final judgment can then be made. Multiplying the matrix in Matrix 5 with the eigenvectors in Matrix 4, we obtain the result. The highest score is 0,504. This score is attributed to Open Source ERP. Branded ERP scores 0,213 and Custom Build ERP scores 0,284. According to the final rank, Open Source ERP is considered the most suitable ERP system for low cost NGN Phone Company among two other alternatives. This selection process result outlines the strategy of low cost NGN phone company. NGN Phone Company is a flexible company, placing strategic business decision consideration mainly based on cost, development opportunity, and system integration. This is inline with the result of the selection process, as Open Source ERP is a very low cost alternative compared to the other two alternatives. Open Source ERP also has wide development opportunity since open source forums are widely available now. Regarding integration with existing systems or future systems, Open Source ERP can be customized to meet the company needs, giving Open Source ERP high flexibilities. This process shows that the model can be practically used to choose the most appropriate ERP for low cost NGN phone company. Apart from the complex and rigorous selection process and the fact that Open Source ERP is chosen as the suggested result of the selection process, Open Source ERP truly provides and alternative that suit the needs of low cost NGN phone company more than any other alternatives. Low license-fee and low implementation cost coupled by wide availability of support make Open Source ERP the best available aternative for low cost NGN phone company. Matrix 6: Final priorities ranking Open Source ERP Branded ERP Custom Build ERP 0,504 0,213 0, CONCLUSION AND RECOMMENDATION This paper presents ERP system selection model and selection process for low cost NGN phone company. The use of strategic alignment inside the model adds contextual alignment between business and IT. This is needed to ensure that ERP implementation will achieve its desired benefits. The analytic network process enables the model to incorporate dependence and feedback among the elements of the decision. Three alternatives of ERP were presented to show the process of making a decision using the proposed model and giving indication of its feasibility in practice. This selection

8 160 International Journal of Electronic Business Management, Vol. 6, No. 3 (2008) process concludes the most suitable ERP system for low cost NGN phone company. The computation of limiting priorities of supermatrix in this paper was done by raising the power of the supermatrix until it stabilizes. It is suggested to try to obtain the limiting priorities using the approach described by Saaty [7] which considers reducibility, primitivity, and cyclicity of the supermatrix. REFERENCES 1. Benroider, E. and Koch, S., 2000, Differences in characteristics of the ERP system selection process between small or medium and large organizations, The Sixth Americas Conference on Information Systems, Long Beach, California, USA, pp Benroider, E. and Koch, S., 1999, Decision making for ERP-investments from the perspective of organizational impactpreliminary results from an empirical study, The Fifth Americas Conference on Information Systems, Milwaukee, Wisconsin, USA, pp Henderson, J. and Venkatraman, N., 1992, Strategic Alignment: A Model for Organizational Transformation through Information Technology, Oxford University Press, NY, USA 4. Lall, V. and Teyarachakul, S., 2006, ERP system selection: A data envelopment analysis approach, The Journal of Computer Information Systems, Vol. 47, No. 1, pp Nah, F. F. and Delgado, S., 2006, Critical success factors for ERP implementation and upgrade, The Journal of Computer Information Systems, Vol. 46, No. 5, pp Presley, A., 2006, ERP investment analysis using the strategic alignment model, Management Research News, Vol. 29, No. 5, pp Saaty, T. L., 1996, Decision Making with Dependence and Feedback, RWS Publications, Pittsburgh, USA, pp Shang, S. and Seddon, P. B., 2002, A comprehensive framework for classifying the benefits of ERP systems, Information Systems Journal, Vol. 12, pp Shyur, H. J., 2003, A semi-structured process for ERP systems evaluation: Applying analytic network process, Journal of e-business, Vol. 5, No. 1, pp Siswanto, J., 2006, A business model of village phone for entrepreneurship development in rural areas of Indonesia, The Sixth Asia Pacific Industrial Engineering and Management Science Conference, Bangkok, Thailand, pp Taube, L. R. and Gargeya, V. B., 2005, An analysis of ERP system implementations: A methodology, The Business Review, Cambridge, Vol, 4, No. 1, pp Themistocleous, M., Irani, Z., O Keefe, R. M. and Paul, R., 2001, ERP problems and application integration issues: An empirical survey, The 34th Hawaii International Conference on System Sciences, Uxbridge, UK, pp ABOUT THE AUTHORS Joko Siswanto is an Associate Professor in Industrial Management Research Group of Bandung Institute of Technology (ITB), Indonesia. He received his Doctor degree from University of Twente, the Netherlands in His current research and teaching interests are in Entrepreneurship and New Business Development and Human Resource Management System. Anggoro Prasetyo Utomo is a graduate student at Industrial Engineering and Management Department of Bandung Institute of Technology (ITB), Indonesia. He is also a lecturer at Harapan Bangsa Institute of Technology, Indonesia. His research interest is ERP implementation strategy. (Received March 2008, revised June 2008, accepted July 2008)

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