1. Why does ERP customization lead to so many headaches when it is time to upgrade?
2. Why were the systems customized in the first place?
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.
4. Kennametal CIO complains that they “paid maintenance for nothing.” Who do you think is responsible for that state of affairs? Kennametal? The ERP vendor? Both? Justify your answer.

Kennametal, a $2 billion maker of construction tools, has spent $10 million on ERP maintenance contracts during the past 13 years and not once could the company take advantage of upgrades, says CIO Steve Hanna. The company’s implementation was too customized: The time and effort needed to tweak and test the upgrade outweighed any benefits, he says. But Hanna kept trying. Recently, he priced the cost of consultants to help with an ERP re-implementation and was shocked by estimates ranging from $15 million up to $54 million.

  • CreatedDecember 31, 2012
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