Programme: Information Systems Level: 2.1

Module : MANAGEMENT IN INFORMATION SYSTEMS
Programme : INFORMATION SYSTEMS
Level : 2.1
Question : ERP CASE STUDY
REG NUMBER: R189095R

NAME: TENDAI RANGA
1. WHY DOE ERP CUSTOMIZATION LEAD TO SO MANY HEAD-ACHES WHEN IT
IS TIME TO UPGRADE?
ERP upgrades become more complex, costly and risky. Every change made to ERP software
makes upgrades that much more complicated and costly. There is need of hiring an external
expert to do the upgrading. A number of organizations have stopped upgrading and maintaining
their ERP systems because customizations have made the upgrade paths too cumbersome and
costly as highlighted by Paul Bertenshaw. In fact, over-customization a key reason why so many
organizations decide to replace their existing ERP systems – not because there is something
wrong with the system per se, but because it has been customized beyond the point of
recognition.
ERP customization can create problems after implementation. Upgrades become more difficult
since the code often needs to be rewritten to support newer versions of the software, which often
leads organizations to defer upgrades – sometimes indefinitely. When we look at trends of our
newer clients, most are looking to replace their old ERP systems largely because they’ve
customized the software so much that they can’t or aren’t willing to take advantage of newer
versions of the software because of the associated risks.
Customization may be a symptom of organizational change management issues. Often times, it

isn’t the customization itself that is the problem. Customization may be a symptom of refusing to
adopt new business processes and software functionality. This could suggest that the
organization may need to invest more heavily in organizational change management to help
stakeholders and employees adapt to new processes. For example to get good ROI from an ERP
system ,there needs a clear understanding of both the total cost of ownership and expected
returns as highlighted by Ralston. Some of the factors to consider include downtime, data
conversion, implementation management, parallel run, staff training and staff re-training.
Each and every ERP implementation involves fairly significant organizational change
management issues, but these challenges are even further magnified when the organization is
making little to no change to the software to accommodate the current realities of the business.
Upgrades may conflict with customization. Organizations then face the choice of ditching their
customized software, forgoing the upgrade, or paying to re-accommodate the customization to
the upgrade.
2. WHY ARE ERP SYSTEMS GETTING SMALLER?
 Less time consuming to manage the whole operations

 In order for ERP to be more affordable
 In order to be more flexible
 Low implementation costs
 In order to reduce the number of servers used by an organisation
 To improve inventory management
 Reduce warehouse costs
 Improved resource management
3. CUTTING PAYMENTS OUTRIGHT TO ERP VENDORS MAY NOT BE POSSIBLE
FOR SMALLER COMPANIES WITHOUT THE IN-HOUSE RESOURCES THAT
LARGER ORGANIZATIONS HAVE. ARE THEY AT THE MERCY OF THE
SOFTWARE PROVIDERS? WHAT OTHER ALTERNATIVES DO SMALL
COMPANIES HAVE? PROVIDE SOME RECOMMENDATIONS.
Smaller companies are at the mercy of software providers because there is need for:
Transparency
Instead of each department having its own information system, all relevant data can be shared
and accessed by a few clicks by integrating an ERP system. This eliminates the need to re-enter
or export data which can result in fewer errors. It increased the productivity of your company
and reduced the expenses on human resource. Thus reporting ability as highlighted by
Bertenshaw. Before the system was in place, he would spend a lot of time weekly exporting data
to create sales reports and sales forecasts.
Quick Decision making
Real-time data provided by the ERP system can be beneficial for management, marketing,
accounting and enables the organization to make vital decisions on time which reduce the
overdue of deadlines. Teams can detect any potential issues that may bump the productivity
level. An overall report of operations allows the business leaders to make an effective decision
on time and respond quickly to a changing business environment thus maintaining competitive
advantage of small firms.
Boost Productivity
ERP for small businesses increase in productivity, which is important for any company’s bottom
line. With increased transparency by smooth business processes, employees can shift their focus
on managing enlarged volumes of business. This aids in transforming various features of
businesses and overcoming the challenges involved in the businesses growth as well.
Streamlined Data Flow

When small business makes the swap to ERP software, it can enjoy streamlined data flow. This
is exclusively true among fast-growing businesses, which may run into problems when it comes
to data being discriminate in different departments. For example, financial data needed by the
inventory department may be difficult to get ahold of. With an ERP software, everything is in
one place and all official data is available to each department.
Exceeding Collaboration
Implementing an ERP for small business can bring a huge change on the matter of struggling
with collaboration. Poor communication and lack of collaboration often come as a result of
employees not having access to data when they need it. When all employees have access to data
across all the departments, collaboration is better facilitated because these workers are better able
to see the big picture within the company.
Reduce Operating Costs.

Most important fact for many small business owners is that an ERP system evidently reduces
overall operating costs. By streamlining data into one software application, now it can save
money on the individual software and management systems that were previously paying for in
each department. For example in the text, ”Kouwenhoven thinks we are going to see a trend
where SAAS players have more impact, which, among other things, will reduce the total cost of
ownership of ERP systems. The SaaS model opens up ERP to small organizations that would not
normally look at implementing an ERP system, because of cost and the required change
management”.
Delivery of Business Insights

When it comes to making decisions for a small business, it’s important to have all the data in one
single system and is confident enough that the data is up-to-date. With ERP for small business,
there’s never any doubt that this is the case. As a result, decision-making is more joyous and
greater peace of mind with having confidence in any choice making.
B. OTHER ALTERNATIVES THAT SMALL COMPANIES HAVE INCLUDE:

 Replacing the ERP system and use the SAP, ORACLE, E- Business and Microsoft, DSS.
Acquire expertise in-house

Continue paying consultants for support if not upgrades
Accept the stagnation of a mature, stable system.
4.What does Bertenshaw mean when he says Matisse gets the benefit of thousands of users
from around the world?
 Reduced costs-hiring costs when upgrading
 ERP provides focused IT costs
 Enhances total visibility
 Improved reporting and planning
 Complete customization of the ERP
 Improved efficiency
 Gets a large number of customers globally
 Online advertisement which is less costly
 Marketing via internet attracts customers
 E-commerce
 Customers feedback helps in decision making
 Improved customer acquisition

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Module : MANAGEMENT IN INFORMATION SYSTEMS

Programme : INFORMATION SYSTEMS

Question : ERP CASE STUDY

REG NUMBER: R189095R

Customization may be a symptom of organizational change management issues. Often times, it

 Less time consuming to manage the whole operations

Streamlined Data Flow

Reduce Operating Costs.

Delivery of Business Insights

B. OTHER ALTERNATIVES THAT SMALL COMPANIES HAVE INCLUDE:

Acquire expertise in-house

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