Over the last decade, many large organizations have been shifting from developing their own information system (IS) to licensing and installing large software packages known as enterprise resource planning (ERP) systems. These organizations now face the challenge of maintaining these costly systems and many are about to make their first upgrade decisions. The study reported herein aims to address the following research questions from the ERP-client perspective: (1) What are the fundamental factors driving ERP maintenance and upgrade decisions? (2) How do these factors differ from those for traditional custom, in-house software? and (3) Do existing software and hardware replacement models suffice for ERP maintenance and upgrade decision modeling? A single case study method and empirical data analysis were conducted and are presented here. We observe that ERP maintenance and upgrade characteristics are indeed unique in three ways: (1) most organizations maintain and upgrade their ERP systems in order to realize increased business benefits from the systems; (2) a new version upgrade reduces the number of ERP-client-done enhancement modifications; and (3) a new version upgrade potentially reduces future legal change patch (LCP) maintenance distributed by the ERP vendor. It was also found that on average LCP maintenance is almost as costly as user enhancements. Based on these findings, we conclude that the existing in-house software and hardware replacement models are insufficient for ERP situations. We propose a preliminary ER-P decision model that overcomes the observed insufficiencies. Copyright (C) 2001 John Wiley Sons, Ltd.
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