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ERP systems selection in multinational enterprises: A practical guide
Article · March 2018

DOI: 10.12821/ijispm060103
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ERP systems selection in multinational enterprises: a

practical guide
Moutaz Haddara
Westerdals-Oslo School of Arts, Communication & Technology
32 Christian Krohgsgate, 0186 Oslo
Norway
www.shortbio.org/moutaz.haddara@westerdals.no
Abstract:
The Enterprise Resource Planning (ERP) system selection is an early phase in the ERP adoption process. When
organizations evaluate an ERP, they commonly develop their own selection criteria that usually involve various system
and vendor related factors. While the selection process is critical, however, there is an apparent research gap in
literature. The ERP selection effort also focuses on the system’s fit with the organizational requirements and needs.
Thus, the selection phase is critical, because if an organization chooses an unfit ERP, the whole project could be
predestined to fail. This research provides an overview of an ERP selection process at an overseas branch office of a
multinational company. The process employed a simple multi-attribute rating technique (SMART) for evaluation. In
addition, this research presents how cross-border data protection laws between the parent company and its branch have
influenced the selection process. As the ERP system has been implemented successfully, the method and the selection
factors have been proven adequate for the selection process.
Keywords:
ERP selection; SMART analysis; multinational enterprise; cross-border data exchange.
DOI: 10.12821/ijispm060103
Manuscript received: 18 June 2016

Manuscript accepted: 21 December 2017
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t he fact t hat reprint ing pr ivileges w ere grant ed by per miss io n o f SciKA - Associat ion for Pro mot ion and D isseminat io n o f Scient ific Knowledge.
International Journal of Information Systems and Project Management, Vol. 6, No. 1, 2018, 43-57
◄ 43 ►
ERP systems selection in multinational enterprises: a practical guide
1. Introduction
Enterprise-wide information systems (IS) adoptions require careful selection and implementation efforts, especially
enterprise resource planning (ERP) systems. ERP systems are modular and bundled information systems that integrate
the enterprise-wide business processes and functions. ERP systems emerged in order to replace the legacy silo systems
through providing a unified and integrated solution for the organization's information-processing needs [1]. One of the
main aims of ERP systems is to support the process-oriented view of the enterprise, as well as standardization of
business processes across business functions, within the enterprise. Thus, enterprises worldwide are allocating a
substantial portion of their IT budgets towards new ERP adoptions, completion of their initial ERP system installations,
or upgrades, extensions and integrations to their existing systems. Among the most important characteristics of an ERP,
is its ability to unify, automate, and integrate an organization's data and business processes across the entire enterprise,
in a near real-time environment. In general, many organizations have their own custom processes set in place, however,
several of these businesses re-engineer their non-standard processes to fit the ERP in order to take advantage of future
updates, benefit from the standardized best-practice processes, and avoid costly irretrievable errors [2, 3]. Also, this
could dramatically decrease the system customization costs.
ERP systems are regularly implemented as multi-phased projects. The implementation projects have several stages and
milestones that typically starts with an adoption decision, then goes through selection of the ERP package and vendor,
the actual implementation, use and maintenance, and finally future evolution [4]. Generally, ERP implementation
projects involve internal IT & key business personnel from inside the organization, as well as, external consultants, or
consultants from the implementation partners. This draws a picture of how resource consuming and costly ERP projects
are [5].
During the selection phase, system/organization fitness is a crucial endeavor. Several large information systems
implementations fail due to the selection of a non-matching system. The matching process happens between the
organization needs, requirements, and expected future evolvement and scalability. The topic of “fit” has been frequently
discussed in IS literature, specifically in enterprise resource planning literature. A wrong ERP system selection would
either fail the project, or critically weaken the system, and hurdle the company performance [6]. In their study, Carton
and Adam [7] argued that the ERP selection process in multi-site/multinational organizations may differ from monolith
ones. There are several factors that would affect and influence the choice of the ERP system at subsidiaries and
international branches. Some of them are related to system standardization issues [7], data sharing regulations across
borders [8], and other operational and integration issues [9, 10]. Thus, the ERP selection process is a non-trivial task.
This is mainly due to the scarcity of available resources, complexity of the ERP packages, and the diverse ERP system
alternatives in the market [10]. In practice, the ERP selection process involves several factors. One of the important
factors is the functional fitness of the system with the business requirements [10, 11].
Although the ERP adoption process has several phases, this paper focuses-on the ERP selection criteria and process.
The remainder of the paper is organized as follows: section 2 presents the related literature, followed by the research
methodology and case description in section 3. Section 4 illustrates the research analysis, and finally the research
conclusions are presented in section 5.
2. Related literature
2.1 ERP systems

ERP systems are standard software packages that provide integrated transaction processing and access to information
for the multiple organizational units and multiple business functions. These functions include finance and accounting,
human resources, supply chain, manufacturing, and customer services. The standard in-house ERP system is based on a
unified database. The database could be locally stored in case of on-premise ERP implementations, or residing outside
the organization boundaries in cloud-based ERP systems. Regardless of the technical architecture of this database, it
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gathers data from the various business functions. The database also feeds the data into modular applications supporting
virtually all of the company’s business activities – across functions, and across business units. When a new process
(transaction) is registered at one corner of the organization, related data in other units is then automatically updated
accordingly. Most companies expect their ERP systems to minimize their operational costs, increase process efficiency,
improve customer responsiveness, provide process-level integration, enhance reporting, and subsequently decision-
making [1]. In addition, several organizations also want to standardize their processes and utilize the best practices
embedded in ERP systems, in order to ensure quality and predictability in their global business interests. This also could
aid in order-to-delivery cycle time cuts [3].
When organizations adopt ERP systems, they face several challenges. Some of those challenges are related to the
degree of business process re-engineering (BPR) needed to accommodate the new system. In addition, customization
and change management are also considered critical challenges during the project. On the other hand, in some cases,
organizations are leaning to adopt a vanilla implementation approach, which could be the least risky implementation
approach [3]. Vanilla implementations radically minimize the degree of customization and clean-slate business process
reengineering, as they follow the standard ERP functionalities, best practices, and process models instead of
customizing the ERP package to fit the enterprise’s unique processes [12]. Regardless of the company size, and the type
of implementation, all ERP implementations require careful project management activities, a committed team, and a
various degree of BPR. After the implementation, organizations usually experience a “shakedown” phase, during which
they encounter performance instability while adjusting to the newly re-engineered processes [13]. This might result in
operational commotions or abridged productivity for a certain period of time.
2.2 ERP fit

ERP fit with the organization, is a paramount criterion in the selection process. The fit perspective can be defined as the
task to technology fit [14]. Goodhue and Thompson [14] argue that the fit is the degree (or process) of matching the
capabilities and functionalities of a certain technology to the demands and requirements of a particular task or process.
This has also been linked to employee performance, as information systems will most likely have a positive impact on
employees or organizational performance only when the technology functionalities and features are fitting to user task
requirements [14, 15]. Hence, identifying the capabilities of the potential ERP system to accommodate the critical
business processes of organizations is the first step in insuring a successful ERP selection. Existing research has
provided cases of early ERP retirement and project terminations, because of a wrong selection due to the gap or “no fit”
between the system and the unique business processes, and organizational requirements [4]. In their study, Haddara &
Elragal [4] recommended that organizations should not ignore the formal ERP selection practices, and emphasized the
importance of user engagement during the selection process, as this could aid in avoiding ERP failures and erroneous
system evaluations. In addition, they have advocated for business process requirements mapping with the potential
system’s technical capabilities, prior to the acquisition decision [4]. In general, several scholars in IS literature have
argued that the organization-specific characteristics and contexts have also been important research aspects throughout
IS implementations. Likewise, studies in the ERP domain are prompting researchers to investigate the implications of
contextual factors, and organizational characteristics on the ERP implementation process. The majority of literature
acknowledges that the organization size has a direct impact on ERP implementation success [16]. Instead, other factors
like “ERP size” could also be a critical factor because of its influence on businesses and implementation complexity.
The fit between the strategic business goals and ERP objectives is also considered an important factor for creating
business benefits from the ERP adoption project [11]. In ERP adoptions, users must identify which goals to achieve
with the new system, how the functionality of the system can realize this, and how to configure, customize, and
technically implement the package [17].
Research results on Greek SMEs suggest that a number of organization-related factors like business process complexity,
change management, and external factors like supply-chain partners and value networks pressure, have a strong effect
on the ERP selection process [18]. Other research conducted in Australian enterprises, suggests that business
requirements, system flexibility, acquisition costs, scalability of the ERP system [19], and the degree of ERP
alignment/fit with the business processes, have a great influence on the ERP selection decisions [20]. In van
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Everdingern et al. [21], their study suggested that the fit of the ERP application with the adopting enterprise’s business
processes is the most critical selection criterion in Nordic European SMEs. Other studies suggested and identified
critical factors that could lead organizations to a successful selection process. The factors were local support, cost, and
suppliers’ business domain knowledge [22]. In addition, CEOs’ technology awareness, employees’ IT competence, firm
size, ERP compatibility [23], and project management [24], were also identified among the critical success factors
(CSF) for selecting the right ERP for SMEs.
2.3 Cross-border and data privacy laws

Due to globalization, communication and technology advancements, the need for cross-border data exchange is
becoming increasingly needed and desired. Multinational and global organizations with international offices and
branches seek to exchange data among its various locations in order to generate consolidated reports and analyze their
global data. In addition, several of these multinationals have certain centralized operations, like centralized human
resource management at the headquarters for example. Yet, nowadays such data exchanges and transfers are becoming
more problematic and costly from a business perspective. This is due to the fact that an increasing number of countries
and regions (e.g. EU) are adopting more strict data exchange and privacy laws that regulate and limit cross-border
transfers of personal data, including transfers to headquarters, branch offices, and subsidiaries [25]. Many of these laws
were decreed based on the mounting public concern about the potential misuse of personal data by some organizations
or parties. Thus, these regulations and laws either clearly forbid transfers to other countries except particular pre-set
conditions are met, or enforce regulatory requirements on the organizations exchanging the personal data [25]. Hence,
the ERP selection process usually differs in the contexts of multinational organizations. In best-case scenario, if a
subsidiary needs an ERP system, the easiest option is to create user accounts on the main ERP system at the
headquarters. However, due to cross-border and data privacy laws in some regions, and separation of operations and
finances, this scenario is not suitable in most situations [7]. In many cases, the headquarters enforces subsidiaries and
international branches to adopt a pre-designed implementation, which would be replicated in each site; this could lead
the individual sites to lose the richness of their local practices and competitive edges. This may lead to large-scale
organizational problems [7]. Thus, the ERP selection process at subsidiaries might be dramatically influenced in cases
of multinational enterprises.
2.4 ERP selection

In order to better understand and evaluate the selection and acquisition process, several studies identified the factors that
affect ERP selection in organizations, and proposed criteria to optimize the selection process. For example, Velcu [26]
has identified several factors that affect the selection criteria, which includes the ERP-to-organization fitness as an
important factor. In addition, Velcu [26] has argued that all the ERP adoption phases are highly interdependent with the
critical success factors of each stage. Moreover, Deep et al. [27] have developed a framework for the ERP system and
vendor selection process, presented in figure 1. The framework demonstrates several phases in the selection process,
which starts with the requirements and project planning, identifying potential vendors, evaluation, and finally selection
of the appropriate ERP package. The framework also illustrates several iterative tasks to be accomplished by the project
team at each stage.
In their research on ERP implementations risks, Aloini et al. [6] underlined the importance of fitness between the
organizational business process requirements and the ERP system’s functionalities and capabilities. They have
categorized the inadequate ERP package selection as being the paramount cited risk factor in ERP implementations (see
table.1). They have also suggested that a wrong package selection is a key concern and could lead to time, cost, and risk
escalations, which can lead to dire events that could ultimately result in total project failures [6]. In addition, they have
encouraged for a structured multi-criteria approach for evaluating the ERP system and vendor. The criteria are
comprised of several factors, including functionality, technology, support, and costs.
◄ 46 ►
Fig. 1. ERP selection framework. Adapted from [27]
Table 1. Risk factors frequency in ERP literature. Adapted from [6].
Risk factor Frequency rate

Inadequate ERP selection High
Poor project team skills Medium
Low top management involvement Medium
Ineffective communication system Medium
Low key user involvement Medium
Inadequate training and instruction Medium
Complex architecture and high number of modules Low
Inadequate business process reengineering (BPR) Medium
Bad managerial conduction Medium
Inadequate financial management Low
Inadequate change management Medium
Inadequate legacy system management Low
A multiple case study conducted in Egypt, indicated that the weighted scoring SMART (simple multi-attribute rating
technique) analysis is commonly used as an ERP selection technique among Egyptian organizations [28]. In addition,
the paper suggested that the responses from the vendor’s references were one of the top deciding factors in the ERP
selection in their target case. Although it is facile to apply and widely used in practice, the SMART analysis’ quality
and usefulness varies between organizations, depending on the factors and weights they ascertain and include in the
analyses. While there is plenty of research on the ERP selection phase, only a few papers present real-world cases.
Due to limitations of available resources and expertise, the high complexity of ERP systems, and the diversity of
selection criteria, selecting the proper ERP system is thus not a trivial task.
◄ 47 ►
3. Research methodology and target case
This research employs a single in-depth explanatory case study research approach [29]. Explanatory case studies are
useful in presenting cases when exploring new phenomena, or when there is a lack of theory [29]. In addition, according
to Yin [30], the explanatory case study research method is recommended when “how” and “why” questions are
demanded, when the researcher has little control on the occurrences, and when the focus of the researcher is on a
current phenomenon that occurs in a real-life context. In general, case studies may involve the analyses of persons,
events, decisions, periods, projects, institutions, or any other systems that are scrutinized and studied holistically
through one or more research methods [31].
Generalizability and transferability from qualitative research and case studies may present some challenges to
researchers. This is mainly because of the relatively small samples or cases in which it could be difficult to replicate
their findings in other contexts [32]. On the other hand, several researchers have argued that it is viable to generalize
and develop theories from such case studies [33]. Guba and Lincoln [34] argue that the well-reported and ‘thick
descriptions’ of case studies could help other researchers in considering the transferability of the descriptions to their
own contexts and lexicons.
The purpose of this study is to increase our knowledge of the factors, which lead to a successful and systematic ERP
selection decision. The study also aims at providing rich descriptions of the ERP selection phase in a manufacturing
SME in its natural setting. Although single case studies generalizability is limited, this research may provide important
insights and directions for future research.
3.1 Data Collection

During this research, the author had access to various data sources. In total, ten qualitative face-to-face and semi-
structured interviews were conducted [30]. The interviews were carried out in one Egyptian branch and strategic
business unit of a multinational enterprise, and the interviews were mainly focused on the ERP system selection process
at the organization. The interviews ranged from 30 to 60 minutes, and notes were taken during the interviews. The
participants included a mixture of stakeholders who had been involved in the ERP system selection and evaluation. The
interviewees’ positions included the general manager, IT manager, business function managers, mid-level staff, and the
external ERP selection consultant. The variety of interviewees stimulated different perspectives, which augmented the
data collected through data triangulation [32], and the analysis consequently.
In general, convenient access to all the resources needed for the successful completion of this research was granted. In
addition, the author had access to the selection criteria, and the final selection report proposed by the ERP consultant
who assisted Sphinx company in the selection process. In addition, the author had access to the data used for the
comparison of the ERP packages, project documentation, internal organizational documents, company profiles,
vendors’ websites, and emails related to the selection process. During the selection process, the consultant asked all the
employees to fill out a “business process form”, in which they described all the business processes they conduct in their
day-to-day operations. Then the consultant compiled and modelled all of this information as business process maps (e.g.
Fig. 2), which the author also had access to.
3.2 The Sphinx Company

Sphinx is an Egyptian branch, and strategic business unit (SBU) of a multinational enterprise. Sphinx is a small-to-
medium-sized enterprise, which manufactures and supplies oil derivatives that are used as raw materials in several
industries. The company’s headquarters is located in Europe. The parent company has been in business for more than
sixty years, and is listed in the New York Stock Exchange (NYSE). It has nine SBUs that virtually cover the world. The
Egyptian company’s name has been concealed for anonymity. There are currently twenty-three employees at Sphinx.
Given the separate operations, financial, scale, and market size of the Egyptian SBU, the Sphinx Company has been
regarded and categorized as an SME, and a small enterprise in particular. At the end of 2013, the parent company
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directed Sphinx to prepare for an ERP implementation. The ERP selection process started in January 2014 and was
completed in April 2014. The selection process was conducted by an external ERP consultant, which was brought into
the project to aid Sphinx in their ERP evaluation and selection process.
The parent company has an SAP™ ERP All in One installed at its premises. When the consultant was asked to join the
ERP adoption project team, he inquired about the possibility of just creating accounts for the Egyptian SBU users on the
main ERP system at the headquarters. While Sphinx is a branch of the parent company, the creation of users on the
main ERP wasn’t possible, due to the European Union (EU) Directive and cross-border data privacy and protection
laws [35]. As Sphinx resides out of the EU, the 1995 EU Directive on data protection legislation (DPL) prohibits the
sharing and transferring of data to countries without proper DPL. Until now, Egypt does not have any formal data
protection laws [36], which makes it difficult for multinational organizations operating in Egypt to share the same data
repository [8]. Hence, the Sphinx company had to have a fresh and separate ERP implementation.
According to the ERP selection consultant, the selection process at Sphinx was limited to SAP products. That is mainly
because the parent company and all its SBUs use SAP ERP. Thus, Sphinx was directed to acquire an SAP ERP to
facilitate yearly reporting and interoperability, and as the ERP has proven fitting to their industry. A previous
consultant, who worked briefly on the selection process, suggested implementing an SAP All in One ERP, like at the
headquarters. With a great difference in implementation complexity, target organization size, and costs between SAP’s
All in One and Business One, the current ERP consultant decided that the selection decision should be based on
business requirements, processes, organization size, and other factors. Initially, there were three SAP ERP system
candidates in the evaluation process, SAP All-in-One™ (A1), SAP Business-one™ (B1), and SAP ByDesign™ (BYD).
However, based on a decision by the Sphinx Company, only two SAP ERP systems have been short-listed for selection.
The systems were SAP A1 and SAP B1. The third system (SAP BYD) was eliminated from the comparison. SAP BYD
is only available as a software-as-a-service in the cloud. While a recent survey on cloud-based ERP suggests that
security is no longer regarded as a prime barrier for cloud-ERP adoptions in organizations [37], the headquarters
communicated to Sphinx that it is not a favourable option due to security concerns. Additionally, B1 is already available
on both: premise as well as in-cloud. Thus, the ERP consultant had a narrow window of selection options at Sphinx
company. The ERP implementation was successfully completed at 2015.
In the next section, details about the ERP selection criteria and comparisons between SAP A1 and B1 ERPs are
provided in more detail.
4. Analysis
The ERP system fit with the organization is a critical factor in the selection process. Thus, the ERP solution must
accommodate the company’s information needs and processes. If the selected ERP system is not able to match the
organization's strategic goals, it could lead to an early ERP retirement or project termination. Software and hardware
aspects are also very important dimensions and factors to be included in the appropriate ERP system evaluation and
selection. At the target case, the criteria for the selection and package comparisons was set after the consultant met with
the Sphinx company’s top management and key users. The selection criteria was not directly dictated, instead, it was
inferred in part, and suggested in part.
The selection process principally employed a process mapping method, and adopted a structured multi-criteria
evaluation that had been developed through literature and the consultant’s practical experience in the field. Besides the
organization’s size and specific contextual dimensions, the evaluation and assessment factors mainly included 11
factors: functionality of the ERP system - Business process mappings with the ERP package, technical criteria, cost &
budget, service and support, vision, systems reliability, compatibility, market position, modularity and integration,
implementation methodology, and organization size and context.
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The abovementioned factors are discussed in more detail below, and an overview of the ERP systems evaluations and
comparisons are provided in table 2.
1. The first criterion included in the evaluation was the functionality of the ERP system. Functionality is said to
be the most essential selection factor. This factor should usually carry a heavy weight in the whole evaluation
procedure. The first aspect in the functionality is called completeness or comprehensiveness. Completeness
entails that the ERP solution should have adequate or even more modules related to the organization’s main
activities, and supports the critical business processes.
During this evaluation criterion, the consultant had developed business process maps (e.g. Fig. 2), which were
compiled from the business process profiles created by the Sphinx Company’s employees. The process maps
were then compared against the candidate systems’ business process maps and best practices. This was a
critical criterion, as it was a yes/no evaluation factor. This means that if the required business requirements
were not matched by a system, the system would be directly excluded from the candidacy.
Fig. 2. Process map sample: delivery-to-payment
As Sphinx’s business processes were mainly following the market standards, both systems turned out to be
accommodating and compliant with the Sphinx’s core business processes. Thus, both systems went through all
of the selection and evaluation stages.
2. The second criterion is the technical criteria. The selection of hardware and software is of huge importance
during the approval of an ERP solution. Preferably, the system should accommodate the current trends and
state-of-the-art in information and communication technologies. Organizations should verify that vendors will
provide upgrades to their ERP products to ensure best utility of technologies and security updates that are more
likely to exist in the future. It is fundamental for organizations to use knowledgeable internal staff, or an
external consulting group to assess and evaluate the ERP system’s technical features. Technical criteria would
◄ 50 ►
also reveal the simplicity of using the software, and other technical aspects, such as system stability and
quality.
3. The third criterion considered in the evaluation is the cost & budget of adoption. Organizations must have
financial strategies to estimate the required budget, which also must include maintenance and upgrade costs in
the total budget. Although the ERP solution should have an attractive price, putting realistic expectations for
the whole cost is crucial for top management and the acquisition procedure. The cost is not only about the
ERP solution and license costs, it contains many other cost factors including the hardware, software,
consulting, training, human resources, organization change management (OCM), etc.
4. Another criterion is service and support. The service and support linked with the implemented application are
with high importance to the success of the strategic project. The majority of organizations usually face
technical issues with the application during the implementation, execution, or after the go-live period.
Integration with currently available systems, customization, and security measures are the most severe
problems for organizations. For handling these difficulties, organizations require maintainability and support
from suppliers, both in provision of information technology expertise and the availability of contextual
field/industrial knowledge.
5. The vision criterion is regularly included in the selection criteria, which relates to the evaluation of the ERP
vendor. Organizations should observe and evaluate the vendor’s vision properly. The vision includes
investigating the future direction of the vendor’s business, and whether it is prone to continue in its current
position during the lifetime of the ERP solution. In addition, the continuous enhancements of the vendors’
products and services are also important, as well as how the vendor is planning for these future enhancements.
The vision would also reveal the supplier’s business image, the current international state, as well as its
background and history. The market position (below) of the vendor is also considered to be an important
aspect when evaluating the ERP vendor. In addition, improvement support and constant support are also
crucial.
6. Another criterion is the system reliability. This is sometimes considered to be the second essential criterion in
the whole evaluation process. Integrating the business practices of all areas, including the new information
technology developments, is often imperative for the new ERP system. Having a strong vendor, which is
considered a market leader in this type of business, can be beneficial for the organization. For example, some
information like knowing how many years the ERP vendor has been working with the core of ERP business
solutions, and if the current users of the system in other organizations are satisfied with the system.
7. Compatibility is deemed as a critical criterion, which means the ERPs compatibility with other legacy or
current systems. There is virtually no one application that can cover all organizations’ requirements. Thus, the
chosen ERP solution must be compatible and ready to be integrated with all the internally grown systems as
well as the niche software or products that the organization may be using to accomplish specialized
requirements. From this perspective, compatibility or integration with other systems is a crucial criterion when
selecting the ERP solution.
8. The market position of the supplier. A large number of organizations rely heavily on vendor’s reputation,
status, as well as service infrastructure when choosing the ERP solution. The world’s leading ERP suppliers
have been following the best global practices in their ERP products. From this perspective, organizations can
look at the ERP products as a process helper or advisor. Specifically, the successfully completed ERP projects
in the same type of business or industry can be considered as a vital criterion and indicator during the selection
process of the ERP system. In addition, the company should choose the ERP supplier based on the industry
experience.
◄ 51 ►
9. A very important criterion is the system's modularity and integration. The ideal ERP system should have its
modules integrated with one another and provide modularity, in which it should enable organizations to freely
choose the modules they seek to implement, without the need to implement the whole package.
10. Another chief criterion is the solid implementation methodology while running the project. The presence of a
reliable, previously tested, and consistent methodology would enhance the project’s success likelihood. In each
phase of the methodology, activities should be defined; carrier, inputs, outputs, milestones, etc.
11. Finally, ERP package fitness with the organization’s size must be evaluated. Larger packages implemented in
small-to-medium-sized enterprises (SMEs) may impose unneeded and avoidable challenges and complexities
during the project implementations and use.
Table 2. Selection overview at Sphinx.
A1 B1
Functionality of the ERP system Both systems have the ability to manage core business operations (e.g. Sales-
Purchasing-Accounting).
According to SAP, both A1 and B1 are able to support virtually all industries [38].
Technical criteria - Requires more complicated, as well as - Entails simple IT footprint.
higher IT footprint.
- B1 could be offered on-premise and on-
- A1 could only be offered on-premise. demand.
- Requires NetWeaver. - Does not require NetWeaver.
Cost & budget - Requires a substantial budget (IT - Requires a substantially smaller budget
footprint; annual license; SAP User; (IT footprint; annual license; SAP User;
Personnel), as well as, a higher total cost Personnel) as well as less total cost of
of ownership (TCO) ownership (TCO).
- Requires a team of: Database - One of the key strength here is that, B1
Administrator (DBA); Basis Consultant; requires only 1 person to manage and
as well as Functional Consultants (at least support.
3 consultants).
- The starter package of 5 users (5000) + 1 - As for the costs, B1 starter package
developer (9000) + 1 professional (5000) could be between 1 and 5 users (Total cost
+ 22% annual maintenance (total cost of of USD 7,000 in USA). Reusable budget
USD 45,000; rough before partner when upgrading to full-fledged B1.
discounts). Add, cost of required H/W.
Service and support Both systems would not be different when it comes service and support, as they come
from the same vendor (SAP), which manages the upgrades, fixes, and Enhanced
Packages (EHP). To avoid the complexity of full system upgrades, the gap between the
current version at the organization and the new versions from SAP, SAP releases
enhanced packages with minimal updates that include only the main new features.
Vision Both systems come from the same vendor; SAP. In fact, more than 80% of SAP’s
revenue comes from the SME market. The same business segment to which Sphinx
Company belongs.
System reliability Both systems come from the same vendor; SAP. With higher rates of successful ERP
implementations (A1 and B1), the system reliability score of both systems marks high
ratios that are sufficient to secure Sphinx Company’s future business.
In 2015, SAP B1 had more than 50,000 customers, in 150 countries and available in 41
◄ 52 ►
A1 B1
country specific versions and 20 languages.
SAP ERP systems also provide Arabic support.
Compatibility A1 is 100% compatible with Headquarters B1 is fully integrated with A1 out of the
in Europe, which also runs the same box, based on its powerful Integration
system (SAP ERP A1). Framework. Various scenarios e.g.,
Business Suite-to-B1 or NetWeaver-to-B1
for master data, sales, purchasing, HQ
reporting, and finance.
Market position Both systems come from the world’s leader in ERP systems SAP. Therefore, they have
the best market position.
Modularity and integration. - All A1 modules are fully integrated. - All B1 modules are fully integrated.
- CRM is a different license/product. - B1 comes with both CRM, as well as

WHM functionality. It should also be
- Has a mobile application, which is free
clear that there is no independent CRM
and ready out of the box, for access from
smart phones and tablets (same as B1). product. Instead, the CRM functionality
has been integrated into the sales and
- Can run on Oracle, MS SQL Server, marketing module/functionality.
IBM RDBMS.
- Has a mobile application, which is free
- Can run on SAP HANA (same as B1). and ready out of the box, for access from
smart phones and tablets (same as A1).
- Can run on MS SQL Server RDBMS

(does not run on Oracle).
- Can run on SAP HANA (same as A1).
Implementation methodology In fact, both systems follow the same implementation methodology from SAP. That is,
the “ASAP” (accelerated SAP). The ASAP implementation methodology is consisted of
five phases: project preparation, business blueprinting, project realization, final
preparation, and go-live and support.
According to SAP [38], implementation time takes 2-4 weeks with B1, while it takes 8-
16 weeks with A1.
Package fitness to size A1 targets medium to large organizations. B1 targets small-to-medium-sized

organizations. More suitable to Sphinx.
The two SAP ERP systems have been evaluated against the selection criteria factors as presented in table 2. After the
selection process was completed, SAP B1 was recommended for implementation at the Sphinx company, as on-premise
rather than in-cloud/on-demand solution. This is fundamentally due to the security recommendations by the parent
company and other integration related issues. As a matter of fact, both SAP ERP systems are able to meet the
requirements of Sphinx Company; and able to integrate with HQ’s ERP system; but B1 has significantly less TCO and
reduced implementation complexity. Table 3 provides a summary of the two ERP systems, the selection criteria, and
their match with the organization requirements and characteristics.
◄ 53 ►
Table 3. Selection summary.
Criteria A1 B1
ERP Functionality ✓ ✓
Technical Criteria ✓
Cost and Budget ✓
Service and Support ✓ ✓
Vision ✓ ✓
System Reliability ✓ ✓
Compatibility ✓ ✓
Vendor’s Market Position ✓ ✓
Modularity and Integration ✓ ✓
Implementation Methodology ✓ ✓
ERP Package Fitness ✓
5. Conclusions
The selection process and ERP acquisition decisions are becoming increasingly complex in a rapidly changing and
competitive environment. Established vendors and third-party partners are offering a large assortment of ERP core and
extended modules, and various support services. In addition, several free and open-source ERP alternatives are offered
over the web. Organizations pursuing systems standardization and integration should evaluate and select ERP systems
that contribute to these goals without sacrificing the functionality of applications they believe are crucial for their
business. Thus, the careful selection of vendors, products, and services provided is necessary, but the final decision has
to be made considering the amount of organizational change required for the adoption and the implementation of the
selected ERP system. This research provides an example of the ERP selection process at an SBU of a multinational
organization. The ERP selection in this case, was to a great extent, narrow in the scope of ERP choices. The reasons for
this limitation were mainly due to cross-border data exchange regulations, integration, and interoperability issues
between the SBU and headquarters. As the parent company uses SAP A1 ERP, thus the headquarters recommended the
exclusive evaluation of the various SAP ERP packages for Sphinx.
This study also illustrates the actual ERP selection process and criteria applied at the Sphinx Company. The selection
process followed the SMART analysis in an innovative manner. That is, 11 criteria factors have been devised and
weighted in order to score the two shortlisted ERP systems. The selection criteria factors included business process
mappings, and packages comparisons among other dimensions. Finally, the final ERP selection/recommendation report
was submitted by the ERP consultant to the Sphinx Company’s top management and the parent company. The report
was approved, then the company progressed in the acquisition, and later in the successful implementation of the chosen
SAP B1 package.
◄ 54 ►
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◄ 56 ►
Biographical notes
Moutaz Haddara
Dr. Haddara is an Associate Professor of Information Systems and program manager of the Digital
Business Systems master degree at Westerdals- Oslo School of Arts, Communication &
Technology, Oslo, Norway. Haddara is also a visiting professor at TIAS School for Business &
Society, Utrecht, Netherlands and SP Jain School of Global Management, Dubai – Singapore -
Sydney. Formerly, he has been an associate prof. at the Department of Computer Science,
Electrical and Space Engineering, Luleå University of Technology (LTU), Sweden. Haddara holds
a PhD in Information Systems from University of Agder, Norway. He has more than 50
publications in the areas of big data, enterprise systems, smart factories, benefits management, and
query optimization techniques. Haddara serves as an editorial and review board member for several
information systems journals and conferences. He also works closely with the industry, and serves
as an advisory council member for the Microsoft Dynamics Academic Alliance in the EMEA
region. Haddara also serves as a researcher and consultant for several other international
institutions, governments and NGOs including the European Union. His projects mainly focus on
the areas of enterprise systems and big data analytics.
www.shortbio.org/moutaz.haddara@westerdals.no
◄ 57 ►
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ERP systems selection in multinational enterprises: A practical guide

Article · March 2018

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ERP systems selection in multinational enterprises: a

Manuscript received: 18 June 2016

2.1 ERP systems

2.2 ERP fit

2.3 Cross-border and data privacy laws

2.4 ERP selection

Fig. 1. ERP selection framework. Adapted from [27]

Table 1. Risk factors frequency in ERP literature. Adapted from [6].

Risk factor Frequency rate

3. Research methodology and target case

3.1 Data Collection

3.2 The Sphinx Company

Fig. 2. Process map sample: delivery-to-payment

Table 2. Selection overview at Sphinx.

- Requires NetWeaver. - Does not require NetWeaver.

- CRM is a different license/product. - B1 comes with both CRM, as well as

- Can run on MS SQL Server RDBMS

- Can run on SAP HANA (same as A1).

Package fitness to size A1 targets medium to large organizations. B1 targets small-to-medium-sized

Table 3. Selection summary.

Cost and Budget ✓

Service and Support ✓ ✓

Vendor’s Market Position ✓ ✓

Modularity and Integration ✓ ✓

ERP Package Fitness ✓

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