Maximizing Return on Investment Using ERP Applications

WHAT THE INTRODUCTION OF ERP MEANT

As the discussion moved forward into the ERP world, another dynamic was added that was not part of the equation when all of the systems used were “legacy” and homegrown. Now, with commercial, off-the shelf (COTS) applications platforms, additional considerations have to be incorporated into IT strategy decisions. All of the COTS vendors have a sales model that includes the initial costs of buying licenses and ongoing maintenance fees for which a business receives problem-resolution support, updates to existing releases, and periodic upgrades to new versions that provide an ever-expanding catalogue of new functionality. We have observed a variety of responses to this new dynamic, but more important, we have also observed how dramatically this arrangement can influence the way IT strategy affects how a business operates, the costs to the business that may be viewed as out of its control, and how different approaches to strategy can have dramatically different positive or negative impacts on business results. The incorporation of these factors into IT strategy is a key to the ability of a business to get benefits from new integrated systems. It does, however, call for a new thought process.

The most prevalent approach to developing and managing IT strategy in support of the ERP environment has been to delay upgrading to new releases as long as possible, even to the point of upgrading only when the release being used is about to go out of maintenance ...