Week 04

What are the implications of maintenance/upgrade for organizations adopting an ERP system?

During last decade there was a dramatic growth in the number of organizations implementing ERP systems within the industry, with aim of data integration and enhancement of information flow among their departments through a unique and centralized system (Sharma et al., 2012). Implementing such complex systems are risky and come with cost for companies. There are two stages in the life cycle of an ERP system implementation, before “Go-Live” stage and after “Go-Live” which sometimes refers to post-implementation stage (Zach and Munkvold, 2012). In fact ERP projects are never finished.

Researches show that system maintenance annually cost the organizations near 25% of the total original implementation budget (Jose and Cristina, 2010). So it is a costly operation and will start from the moment system is going live until retire from operation in organization. Although not all the maintenance/upgrade operations are successful. Sometimes they can overrun time and budget constraints, or unable to satisfy the user expectations, even they can cause damages to the overall system performance. So if maintenance/upgrade of a running system does not fit, it may cause the system to become useless.

As we know ERP system is a standard software package adjusted to do specific tasks to fulfill an organization needs. But maintaining and upgrading such a system is different from normal software, because of the size, scope and the organization impact that it has.

Unfortunately there is no certain structured methodology for following as a guarantee to successfully doing the ERP maintenance. But one of the key factors is that the organizations business processes and their ERP system should be aligned to get best results from maintenance operation (Jose and Cristina, 2010).

Do you think the text captured the complexity of this?

No, I believe the text book did not debate/explain the scope of the complexity for maintaining process. But here we can discuss the main reasons involved in maintenance stage and categorized them as follows (Jose and Cristina, 2010):

1-      Rapid changes in the business environment

Business is dynamic and organizations are growing in size and scope of services/activities; they should be able to keep up with these changes in order to remain in competition. So although an ERP system can serve an organization well for a while, it needs maintenance and upgrade in order to be able to satisfy user needs and perform all the functionalities desired

2-      User support

By undergoing maintenance the organizations give vendors/developers the chance of implementing the system to enhance its functionality and improve any malfunctions detected by users during system usage (obviously not all the errors/malfunctions can be detected before Go-Live stage)

3-      Usual software update/maintenance

As mentioned before ERP system is a software package, but in larger scale and specific functionalities, so like any other software it needs modification/improvement. Some updates are general for systems like usual security updates, but some updates are developed for a specific task and modifying a specific module of a system.

There are also risks associated with upgrading an ERP system, specially customized ones. Because usually vendors offer a standard package are responsible for the systems they provide and implement for the organization, so if there are so much customization to that system vendor can terminate the support for that. This can cost more and cause problems for the company because they need to do in-house coding/development which is risky, time consuming and costly.

References:

JOSE, L. S. & CRISTINA, L. 2010. A multicriteria approach for risks assessment in ERP maintenance. The Journal of Systems & Software, 83, 1941-1953.

SHARMA, R. R. K., PATIL, S. M. & TANDON, A. 2012. CUSTOMIZATION AND BEST PRACTICES MODEL FOR ADOPTING ERP SYSTEM: AN ANALYSIS. International Journal of Business Strategy, 12, 1-9.

ZACH, O. & MUNKVOLD, B. E. 2012. Identifying reasons for ERP system customization in SMEs: a multiple case study. Journal of Enterprise Information Management, 25, 462-478.

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