Selection of ERP Package:

Once it is decided that the enterprise needs an ERP package, the most critical task would be to select the most suitable package. The market is flooded with large variety of ERP packages and it is often very difficult to select the best suited product. The importance of this decision is mainly because of following reasons:

a. ERP procurement and successful implementation is extremely expensive affair. For instance, Baan IV costs Rs. 50 lakhs to Rs. 8 crores, SAP R/3 costs Rs. 2.5 lakhs per licence, RADICAL costs Rs. 25 lakhs to Rs. 1 crore (source : Computers Today, August 1999). Out of these, SAP's R/3 is most popular with around 30% market share. QAD Inc. captures about 26%; BaaN, BPCs, and Ramco System each captures around 8-10% market share in global. Considering the high onetime cost in procurement ERP, it is very necessary to make the choice extremely carefully.

b. Implementation of the ERP contains risks. Jokingly, some of people have called this as Expensive Risky Proposition. The risk is mainly because of changes, which can be needed in the process and procedure so as to fit into the scope and purview of selected ERP. Resistance to modify is other risk factors. It has been notice that the benefit of ERP implementation is not immediately forth -coming. Although, direct ROI (return-on-investment) or productivity measure may not be adequate to justify the ERP adoption. Moreover, if the selected ERP package is a totality mismatch with the present practices, there are far greater risks of failure. Hence, appropriate selection of ERP is extremely important.

c. ERP selection is strategic decision. It has far-reaching effect. It is also a long-term decision which is hard to get reversed. Secondly, once the vendor is decided, it is not proper to go for changes in near future. Thus, the decision regarding whether to go for ERP or not is extremely significant as it is normally a one-time activity, which is complicated to get reversed and is highly capital intensive.