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This paper aims to study an enterprise resource planning (ERP) software selection problem. The primary goal of this paper is to propose a two‐phase procedure to select an ERP vendor and a suitable ERP software.

In the first phase of the proposed method the preliminary actions – such as constructing a project team, collecting all possible information about ERP vendors and systems, and identifying the ERP system characteristics – are established. In the second phase, the authors present a modular approach to ERP vendor and software selection and propose a 0‐1 programming model to minimize total costs associated with procurement and integration expenditures.

The proposed approach and the model are considered to be more useful for small manufacturing enterprises (SMEs).

In using the model for analyzing the data about a real …