Day 2 Articles

The ERP Purchase Decision: Influential Business and IT Factors

The objective of performing the research was to determine a set of business and IT factors that influence the purchase of ERP systems.

In the research a literature review on the potential ERP package capabilities was completed.

Five major vendors of the ERP (SAP, Oracle, PeopleSoft, Baan, J.D. Edwards) have occurred since 1997. SAP holds the largest market share.

Vendors are developing faster implementation methodologies and specific industry solutions to provide easier and less costly service for mid- and small-sized firms which will provide larger market spectrum.

In early 1990s, the ability to better meet various competitive goals, the desire to reengineer business processes, and access to integrated data were three influencing business capabilities of the ERP purchases. In these years, many businesses started BPR initiatives to achieve the results that will support their current system is inadequate in performing their BPR efforts.

Currently the experiences have shown that the business should be matched to the software rather than matching the software to the business. Therefore, implementing an ERP simultaneously results into reengineering business processes and replacing legacy systems.

In the second half of the 1990s, replacing the aging mainframe systems with modern enterprise-wide client-server architectures, replacement of legacy systems that no longer meet the firm’s needs, reducing the information systems costs by buying rather than building software were the three influencing IT capabilities for the ERP purchases.

And also between 1996 and 1999 avoiding year 2000 problems by adopting an ERP seemed reasonable for some companies. And at the same time they could improve their information systems capabilities.

As a conclusion, the results from the factor analyses are as; the four business factors are, data integration, new ways of doing business, global capabilities, flexibility/agility; and the four IT factors are IT purchasing, IT cost reduction, IT expertise, and IT architecture. And the Y2K problems affected the purchases before 2000.