Do Cloud ERP Systems Retire? An ERP Lifecycle Perspective

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CENTERIS - International Conference on ENTERprise Information Systems / ProjMAN CENTERISConference - International Conference on ENTERprise Systems / ProjMAN International on Project MANagement / HCist Information - International Conference on Health International Conference on Project MANagement / HCist International Conference on Health and Social Care Information Systems and Technologies, CENTERIS / ProjMAN / HCist 2018, 21and Social Care Information Systems and Technologies, CENTERIS 23 November 2018, Lisbon, Portugal / ProjMAN / HCist 2018, 2123 November 2018, Lisbon, Portugal

DoCloud CloudERP ERPSystems SystemsRetire? Retire? Do AnERP ERPLifecycle LifecyclePerspective Perspective An Sonny Demi, Moutaz Haddara* Sonny Demi, Moutaz Haddara*

Department of Technology, Kristiania University College, 32 Christian Krohgs Gate, 0186 Oslo, Norway Department of Technology, Kristiania University College, 32 Christian Krohgs Gate, 0186 Oslo, Norway

Abstract Abstract With the rapid development of technology and the increasing transition of on-premise enterprise resource planning (ERP) systems to cloudWith rapid development of technology and theneeds increasing transition of on-premiseERP enterprise resource planning (ERP) systems to cloudbasedtheERP systems, the traditional ERP lifecycle to be reviewed. Cloud-based systems are based on a different infrastructure than based ERP systems, the traditional ERP lifecycle needs to be reviewed. Cloud-based ERP systems are based on a different infrastructure than traditional on-premise systems. This research investigates how cloud ERP systems may potentially affect the ERP lifecycle, especially the traditional on-premise This research ERP systems the ERPERP lifecycle, especially ERP retirement phase.systems. ERP retirement is theinvestigates stage whenhow the cloud existing ERP needsmay to bepotentially replaced affect with another system. This willthebe ERP retirement phase.anERP retirement is the when the existing ERP needs to be replaced with another ERP system. This&will be investigated through in-depth case study at astage cloud-based vendor in Norway, and via using the ERP lifecycle provided by Esteves Pastor. investigated case systems study at amay cloud-based vendor Norway,timeframes and via using thetheir ERPon-premise lifecycle provided by Esteves & Pastor. Our results through suggest an thatin-depth cloud-ERP have longer ERPinlifecycle than counterparts in general, and a Our results suggest that cloud-ERP systems may have longer ERP lifecycle timeframes than their on-premise counterparts in general, and a shorter ERP retirement phase in specific. shorter ERP retirement phase in specific. © 2018 The Authors. Published by Elsevier Ltd. Authors. Published by Elsevier Elsevier Ltd. ©This 2018 Authors. Published by is The an open access article under the CCLtd. BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) This is an open access article under the CC BY-NC-ND (https://creativecommons.org/licenses/by-nc-nd/4.0/) BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) Selection and peer-review under responsibility of thelicense scientific committee of the CENTERIS - International Conference on Selection and peer-review responsibility scientific CENTERIS -- International on scientific committee committee of ofonthe the CENTERIS International Conference on ENTERprise Information under Systems / ProjMANof- the International Conference Project MANagement / HCistConference - International ENTERprise Information Systems / ProjMAN - International Conference on Project MANagement / HCist - International Conference ENTERprise Information Systems / ProjMAN International Conference on Project MANagement / HCist International Conference on Health and Social Care Information Systems and Technologies. on Health and Systems andSystems Technologies. Conference onSocial HealthCare and Information Social Care Information and Technologies. Keywords: Cloud-based ERP; ERP Systems; ERP Lifecycle; Retirement Keywords: Cloud-based ERP; ERP Systems; ERP Lifecycle; Retirement

1. Introduction 1. Introduction Enterprise Resource Planning (ERP) systems have steadily evolved throughout several decades and now virtually cover Enterprise Resourceand Planning systems have steadily evolved throughout several decades and now virtually coverin business processes routine(ERP) transaction for the whole organization. One of the predecessors of the ERP system emerged business processes and routine transaction for the whole organization. One of the predecessors of the ERP system emerged in * *

Corresponding author. Tel.: +47-22-59-6000. Corresponding author. Tel.: +47-22-59-6000. E-mail address: [email protected] E-mail address: [email protected]

1877-0509 © 2018 The Authors. Published by Elsevier Ltd. 1877-0509 2018 The article Authors. Published Elsevier Ltd. This is an © open access under the CCby BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) This is an open access articleunder underresponsibility the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) Selection and peer-review of the scientific committee of the CENTERIS - International Conference on ENTERprise Selection and Systems peer-review under responsibility of Conference the scientificoncommittee of the CENTERIS Information / ProjMAN - International Project MANagement / HCist- International - InternationalConference ConferenceononENTERprise Health and Social Information Systems / ProjMAN - International Conference on Project MANagement / HCist - International Conference on Health and Social Care Information Systems and Technologies. Care Information Systems and Technologies. 1877-0509 © 2018 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (https://creativecommons.org/licenses/by-nc-nd/4.0/) Selection and peer-review under responsibility of the scientific committee of the CENTERIS - International Conference on ENTERprise Information Systems / ProjMAN - International Conference on Project MANagement / HCist - International Conference on Health and Social Care Information Systems and Technologies. 10.1016/j.procs.2018.10.079

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the 1970s and was called material requirements planning (MRP) system, which later evolved into manufacturing resourceplanning (MRPII) systems. MRPII also covered other more organizational business processes that earlier were not included. The ERP system as we know it today, did not emerge before the 1990s. The main difference between ERP and its predecessors is that ERP covers the operations of the whole organization and supporting all of the key business processes at the various business functions, while earlier systems focused on certain operations such as production planning and manufacturing related operations (1). Recently, ERP solutions evolved into cloud-based platforms, either as hybrid systems or true cloud-ERP systems. According to (2) since the emergence of cloud computing, it has been seen a key strategic technology for future development and has the capability to change the traditional way of using IT in organizations. Gartner defines present ERP solutions as postmodern ERP, meaning that components and services of the ERP systems are more loosely coupled than before and has the capability to replace other foreign components, resulting in best-of-breed solutions (3). In-house systems are being pushed to private and public clouds through the Software as a service (SaaS). Furthermore, Gartner is claiming that cloud-based ERP is the dominating solution in the present. Likewise, another study (4) also argues that new ERP development is taking the form of cloud-based and is increasing while traditional ERP is decreasing. The evidence of this steadily growing gap between on-premise and cloud-based ERP systems can be seen in the industry. According to an industrial report (5), it is projected that by the end of year 2018, the majority of companies (60%-70%) will place their infrastructure and software in the cloud. Moreover, a questionnaire answered by 490 CIOs all over the world gives an indication that Cloud computing (SaaS) was ranked as the 4th largest IT investment and should get more future investments as pointed out by (6). In addition, IT budget allocation for cloud services from 2016 to 2017 shows an increase from 15.1% to 25.3%. ERP in the cloud can be seen as Software as a service (SaaS) meaning a software delivery model the data and the application are centrally hosted in the cloud (4). The SaaS market globally had a revenue of 13.1 billion USD in 2009 and was projected to reach 40.5 billion USD in 2014. One third of all business software purchases in 2014 was expected to be through SaaS (4). Already in 1999 it was predicted that the ERP market will grow rapidly and could achieve a growth rate up to 40% the next half a decade (7). Considerable number of researches has been conducted on ERP as an on-premise system and how each phase of the system works, whether it is acquiring, implementing or using the system. However, there is little to none research regarding the retirement phase of an ERP system including the lifecycle with the focus on cloud-based systems as an emerging technology and topic within the ERP field. The ERP lifecycle proposed by (7) is a six-phase ERP lifecycle where each phase can be analyzed by four dimensions, the significance of this lifecycle model is that the retirement phase is proposed for the first time in the field of ERP. According to (7-10) the majority of researchers focused on initial implementation while there is a lack of attention on the post implementation phases of the ERP lifecycle. This seems as a good theoretical lens to further investigate the lifecycle model based on cloud-based ERP systems and especially the retirement phase. While there is a research gap due to the scarce literature, however, via adopting the ERP lifecycle framework (7), this research will attempt to investigate and answer the following research question: “How will the retirement phase in the ERP lifecycle be affected by a cloud-based ERP?” This study investigates the research question by analyzing a case study of a cloud-based ERP system vendor in Norway named Xledger. Xledger offers a cloud ERP solution, and acts as the sole vendor to its direct customers and partners. This paper is organized as follows: the following section presents the study’s background literature. In section 3, we introduce our target case and methodology. Research results and discussion are presented in section 4, and finally our conclusions and recommendation for suture research are provided in section 5. 2. Literature background ERP systems can be seen as modules composed together of software packages with the modules containing human resources, sales, finance, production and other modules to provide integration for the whole organization to make information flow seamlessly through the business processes (11). Furthermore, from the era of 1990 until present, ERP systems became the standard system, replacing other legacy system such as MRP & MRP II (11). Research shows that ERP systems in general has grown drastically the recent years (12). The market has become more mature and the expectation of ERP systems to become more flexible and adaptable is getting higher than before (11). To meet this trend, cloud ERP is provided as a solution due to benefits such as lower upfront investments and a more flexible system (12). However, the benefits and drawbacks between onpremise ERP, hosted ERP and cloud-ERP has not yet been investigated (12). Common practice when purchasing on-premise ERP is that the system is supposed to live as long as the organization. Consequently, this opposes problems since an organization always evolve while the on-premise ERP system will be static. If the organizations growth is at a faster pace than upgrading the system, will create a gap between the organizations new needs which the system cannot deliver (3). As a result, the entire system might need to retire and be replaced by another system with a better fit. Reasons for replacing might be such as merger



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& acquisition, the system is not maintained professionally or the organization outgrows the system faster than it can evolve (3). 2.1. Cloud ERP Cloud-ERP is emerging as the new trend in the ERP market as opposed to on-premise ERP systems, this is due to cloud-ERP having the advantages of economies of scale gained from shared resources (11). The emergence of cloud computing provided opportunities for creating new business for organizations through technology that provides collaboration and communication in an enhanced way by delivering cloud-based ERP. Furthermore, cloud computing provides up-to-date IT resources and a pay-per-use transaction model instead of upfront investments (13). To understand the emerging trend of cloud-based ERP, the fundamental technology that cloud-based systems are developed on is cloud computing. Cloud computing can be defined as a model for enabling flexible, on-demand network access to a shared pool of configurable computing resources that are delivered and released with minimal management effort from the client side, and with minimal need for client and service-provider interaction (14). One of the main visions for cloud computing is the reduction of computing costs by sharing a large pool of resources, which also could increase reliability, availability and flexibility. As a user of the cloud-based ERP system, the resources will not be shown from where or how they are provided to the user, as the system’s vendor takes responsibility for the IT resources provision. Multitenancy is another concept that emerges from cloud computing, the elasticity from cloud computing provides the ability to give the proper resources to the user at the time needed, same resources can be used and shared for multiple users from one system vendor (14). Multi-tenancy is a factor defining true cloud-based ERP systems, the software used in cloud-based applications provides a single instance of software application to serve multiple tenants (customers) and is able to meet business needs by being configurable (12) . Cloud services are usually provided through several delivery models, one of the most common delivery models of cloud computing is SaaS. SaaS is also the delivery model most used for cloud ERP (11). Furthermore, key characteristics of cloud is that the hardware management is distanced from the buyer, the costs is seen as operational expenditures (OPEX) from the buyer’s side and the infrastructure is highly elastic (12). When organizations reach the point of considering a new ERP system, there are several factors that could lead them to favor a cloud based ERP over an on-premise solution (3). Cloud ERP has benefits such as reduced up-front costs, better follow up from the vendor, and faster system upgrades and enhancements (2). While cloud computing has attracted a large number of researchers, however, there is considerably low number of research that target cloud ERP systems (11). While Cloud ERP systems can provide various potential opportunities to organizations, however, several studies have identified barriers for cloud ERP adoption in organizations. For example, (15, 16) called for more research to determine the level of configuration and customization ability of cloud ERP systems. In addition, privacy and security issues are regarded as paramount barriers for cloud ERP adoptions in general (12), and vendor lock-in was found to be the top adoption barrier in Norway (13). 2.2. ERP Lifecycle (7, 17) argue that an ERP system is not something that is likely to end but will instead evolve with the organization. ERP systems require alignment between business processes and IT strategies. Change is inevitable when evolving, in order to handle the change, one has to know what to change in the technical, social and organizational contexts (7). The ERP vendor is responsible to always guarantee that the ERP system is securely operated, fix minor and major issues, apply system upgrades, extend and integrate with other systems while preserving the functional requirements of the system users. The ERP lifecycle framework (7) (fig. 1), sets out to elaborate upon research issues around ERP systems in the time-frame of an ERP lifecycle, which is structured in several phases and dimensions. In addition, the framework (7), was the first framework to explicitly propose the retirement phase in the ERP literature (1). The ERP lifecycle is composed of several phases that an ERP system goes through during its lifetime in organizations. The phases are adoption decision, acquisition, implementation, use and maintenance, evolution, and lastly the retirement phase. The retirement phase is the stage when the current ERP becomes obsolete and needs to be replaced with another ERP system (7). (18) reviewed articles from the period of 1996 – 2013 and only found 4 articles that address the ERP post-implementation stage. Clearly, the low attention to the post-implementation phase is due to the focus on the implementation phase by researchers (18). According to (18, 19) ERP is entering an era of rapid implementation with easy configuration and therefore the focus should switch from implementation to post-implementation. The retirement phase can be seen as a state when an existing ERP system is replaced by another ERP system (1, 7, 20). According to our review of the current ERP literature, there are only three studies that specifically mention or address the ERP retirement phase (e.g. (1, 7, 17)). The retirement phase in not only relevant when replacing an old system but is also valid with the emergence of new technology or the inadequacy of the ERP system to meet the business needs (1, 7). These issues mentioned can have another perspective, (18) argue that the final stage is going to happen when the ERP system is not able to reach a higher level and resulting in

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replacement. (21) also agree that at a certain point, the system will be replaced with an upgraded or another system. (22) debate that if the organizations deal with the matter in a timely manner, then upgrades will happen early in the post-implementation period and this may yield higher returns and better organizational performance. However, if the upgrades happen late in the post-implementation, it may signalize that organizations might build on the foundation (ERP system) and extend with other modules etc. (23) argue that if the setting is in a cloud-based ERP instead of a traditional ERP system, then cloud services will be adopted and used until retiring. However, retirement in this case means either retiring parts of the system and initiating a new lifecycle and integrating other parts of the system with the new parts. Consequently, in the case of retiring, the organization needs to either discontinue with the existing provider, switch to a new provider or return to on-premise IT. (23) also mention that researchers and practitioners know the challenges of the retirement phase, and point out that the challenges in the retirement phase occur in the phases prior and they need to be addressed properly.

Figure 1. ERP lifecycle framework (Adapted from (7))

3. Methodology and case As mentioned earlier, the main objective of this research is to explore how the retirement phase of a cloud-based ERP will be affected via a case study on Xledger. The process stems from (24), where the process is based on inductive theory-building from case studies. The process begins by defining a research questions and selecting case(s) to gather data for analytical purposes. The findings then can be compared against existing literature. Thus, case study research has been adopted in this study as it can aid in answering the “how” and “why” constructs of the research question. This can be accomplished by studying a contemporary phenomenon in its real-life context. The case study will be based on exploratory design through a single-case study. The scope and focus of a case study can be seen as an empirical inquiry, in which it attempts to explore a contemporary phenomenon within its real-life context, and where boundaries between the phenomenon and its context are not clearly apparent (25). As stated by Yin (25), exploratory research allows researchers to study a specific topic which is lacking in literature and can be used in a consecutive research study and identifying potential research projects. 3.1. Interview guide and data collection The qualitative interview guide was developed by the authors in order to gather insights about the topic understudy. The questionnaire covered several topics, including: reasons and motivations for cloud ERP adoptions, capabilities of the cloud vs. on-premise ERP, cloud ERP retirement, cloud ERP integration readiness, and challenges with cloud ERP retirement. The guide was based on the issues identified in the existing literature of cloud ERP challenges, opportunities, and ERP retirement. The case study went over a period of four months in total. The first author had continuous access to all employees, internal documents and the possibility to observe the work environment and have informal talks with employees. The data was collected through in-depth semi-structured qualitative interviews (26) with Xledger employees, and observations. The informants were mainly ERP consultants and sales consultants. Hereby, the ERP consultants will be referred as (ERP Cons n) and sales consultants will be referred as (Sales Cons n). All interviews were digitally recorded and translated from Norwegian to English and then transcribed. The interviews´ duration lasted between 30 to 60 minutes. As the researchers had access to the target case, observation notes and internal documents were also reviewed. By combining these sources, the authors were able to triangulate the results and to enhance the validity of the findings, also called method triangulation (27). In total, the authors conducted eight in-depth interviews. More information about the informants is provided below. Table 1. Overview of informants Informant

Role

Years of Experience

Expertise

ERP Cons 1

ERP Consultant 1

10

Project module

ERP Cons 2

ERP Consultant 2

4

Integration

ERP Cons 3

ERP Consultant 3

8

Financial module

ERP Cons 4

ERP Consultant 4

8

Accounting



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ERP Consultant 5

1

X

Sales Cons 1

Sales Consultant 1

12

Sales

Sales Cons 2

Sales Consultant 2

7

Sales

Sales Cons 3

Sales Consultant 3

8

Marketing

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3.2. Case organization (Xledger) The case study was conducted at Xledger’s head office in Oslo, Norway. Xledger was co-founded in Palo Alto in 2000 by Jarle Sky, the current product director and chairman, the current chief technology officer Lennart Grøtt Holen, and May Helen Kvarberg, the current chairman and product director. Xledger is a unified cloud ERP system with more than 10000 customers over 60 countries. Xledger provides a system that gives the companies a possibility to gain control to modules such as accounting, project management, stock, procurement and logistics. Furthermore, Xledger differs from other ERP vendors by delivering a true (born in cloud) cloud solution to end-users. The system also provides process automation, insights and scalability. To understand Xledger as a company, the business model used by Xledger shows some key characteristics of a vendor providing cloud-based solutions. In addition to the system, Xledger offers consultancy support, certification, and training. Their business model is based on having direct customers and indirect customers (fig. 2). The direct customers are typically larger customers with higher revenue around 50 – 100 million NOK and have a customer-vendor relationship. Indirect customers are managed through their partners, and their typical partners are accounting firms.

Figure 2. Xledger’s business model

4. Findings and discussion The findings presented below originate from in-depth interviews, informal and formal business settings through observation notes and conversations with employees at Xledger and some customer cases. The business processes and business model at Xledger were quite different from what was found in the literature regarding traditional ERP system and even minor differences when it comes to cloud ERP. The ERP consultants would have a multipurpose role such as contributing to implementation projects, holding courses for providing training on the system to new and old customers, second line support for existing customers and even testing the system when new functionalities were to be released. Summing all of these functions together implies a change in how customers are continuously using the same system and learning new functions that are valuable to the customers to further enhance their business processes. Consequently, some of these customers originate since the system was first released and displaying an active customer relationship for over a decade and continuing. “We have customer relationships all the way back to 2005, before commercial roll out”, (ERP Cons 1). “Many of our partners have been with us since the start and are still active”, (Sales Cons 2). Xledger´s personnel are divided 50/50 with developers accounting for half of the personnel and the rest are administration and consultants. The system itself is under continuous update and is always with the newest

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functionalities across all customers. Of the ERP consultants, some had divided expertise in various areas such as having one integration expert and other experts for each existing module. The sales consultants would imply that customer meetings and requirements specifications for the system would differ a lot from an on-premise ERPs and even how the process from initial interest to acquiring the system is also different. 4.1. Cloud ERP and technological changes Further findings indicate that changes in the cloud ERP have already happened and have potential for further changes. Respondents elaborated on what seems to be impending reasons based on their experience. The following question was asked, “What do you think are the main motivations for adopting a cloud-based ERP solution in the future?” The answers provided by the respondents seem to be explicating two sides of the same case, as cloud ERP is always associated with technological changes, which again makes it more intricate. Six out of eight respondents mentioned that the switching barriers will become much lower, making it easier to swap to other vendors and system if wanted. Furthermore, all of the respondents list competing on price and various pricing models as a reason for swapping. “An ERP system in the cloud will just be a monthly fee which you have the freedom to walk away from”, (ERP Cons 3). “Reasons for it being cheaper is because you only pay for the usage of the system, in a traditional ERP system, licenses need to be paid independently from the usage. The majority of companies varies in activity, which is when a cloudbased ERP system is beneficial”, (ERP Cons 5). In addition, the respondents discuss other central reasons for future cloud ERP switch, such as customers wanting to have the newest functionality, scalability and flexibility within the system and staying updated on the technology. The respondents argued that cloud-based ERP systems need to be developing continuously and providing new functionality due to customer needs and staying competitive and attractive in the market. Eight out of eight respondents talked about how customers wanted to avoid being the one in charge of the system due to several reasons. “I believe that those still using an on-premise solution and those are still many, have a real choice when choosing, whether upgrading and spending a fortune or having an evaluation for a cloudbased ERP system”, (Sales Cons 3). “Customers are avoiding internal drifting, servers and licenses are unwanted and they are tired of upgrades”, (ERP Cons 1). In addition, another informant states that, “customers are seeing the possibility of automation, simpler drifting and maintenance when transitioning to the cloud”, (ERP Cons 1). Furthermore, the necessity of newer functionality and technology is a consequence of the transition from on-premise ERP systems to cloud-based ERP systems. Respondents talk about how fast this development has been. Four of the eight respondents used a retrospective view and by their long experience explained that a lot has changed in just a period of a decade. “Everyone is talking about cloud now”, (Sales Cons 1). “The way of purchasing and using an ERP system in the context of cloud-based is completely different, it requires a lot less resources and economy”, (ERP Cons 2). “It has been often forced out through a process over time or just seeing the possibility of being more modern on technology”, (Sales Cons 1). “Technology is developing rapidly”, (ERP Cons 5). Lastly, respondents elaborated on how Xledger as a cloud vendor was suitable to manage future changes. Through observations in the company, it has been seen that Xledger puts a lot of effort into developing the system, optimizing and adding functionality continuously such as automating processes, reducing downtime, optimizing databases, adding integration possibilities and making the system more user-friendly and user-focused. Furthermore, trying out innovative solutions allows them to be leading in the field. “It is obvious that technology and systems changes a lot”, (ERP Cons 3). “We are in a position to find solutions and adjust to these changes by having a flexible platform”, (ERP Cons 4). Lastly, one of the informants states that the cloud ERP industry standard has evolved in a much faster pace than what has been recorded in the world of academia, “researchers have not quite yet reached the point to fully grasp the drastic change from onpremise systems to cloud-based ERP systems”, (ERP Cons 4). 4.2. ERP lifecycle- delta changes Change is inevitable when ERP systems are evolving, in order to handle organizational needs; one has to know what to change in the technical, social and organizational context. The ERP lifecycle framework presented by Esteves and Pastor (7), sets out to elaborate upon research issues around ERP systems in the time-frame of a lifecycle which is structured in phases and dimension. A set of questions were asked to the respondents regarding the ERP lifecycle and with more focus on the retirement phase to uncover how the respondents perceive the lifecycle of a cloud-based ERP system. The retirement phase of an ERP system is important to investigate since this phase is not only relevant when replacing an old system but is also valid with the emergence of new technology or the inadequacy of the current ERP system to meet the business needs. Respondents were asked if customers had an on-premise system or cloud-based ERP system before switching over to Xledger. In almost all of the cases, customers were using an on-premise system.



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The majority of respondents have long experience within the field and have not seen customers switch from cloud to cloud solutions. “In 99% of the occasions I have experienced, customer had an on-premise system”, (ERP Cons 1). Nevertheless, one of the respondents had experienced customers with simpler cloud solutions that covered parts of their daily systems before changing over to a true cloud system, but this belonged to the rare occasions. “Usually customers change from on-premise system or some sort of hybrid solutions, but not from cloud to cloud”, (ERP Cons 2). Further findings were found when asked if the respondents believed that customers would keep the cloud-based system longer or if retirement will occur more often. Most of the respondents were discussing this in detail and the answers varied from respondent to respondent. Four of the eight respondents believed that replacing the ERP system would occur more often in the future. Some of the reasons mentioned were variables such as lower up-front investments in the systems and much quicker and easier implementation of cloud-based ERP systems. “The customers involved in a cloud-based ERP lifecycle will experience that the system is continuously evolving and that will keep them from changing more often”, (Sales Cons 2). However, three of the remaining respondents believed that customers would keep the same system but changing systems in the future would become easier to do. “The threshold for changing systems will become much lower than with a traditional system”, (Sales Cons 3). The majority of the respondents elaborate that it is the vendors’ responsibility to keep the customers satisfied when the barrier of changing systems becomes lower. Since using a cloud-based system will be seen as a monthly cost, vendors such as Xledger have to make sure that the system is up and running and not causing problems such as down-time or availability issues for the customers, since it is easy to just switch over to another vendor, from the respondents´ point of view. One of the respondents’ comments that it was difficult to change to other systems when having an on-premise system due to investing millions into the system. In addition, one of the respondents mentions about the vendor lock-in situation in the case of Xledger. “We do not have any vendor lock-in, customers are free to leave whenever they want”, (Sales Cons 2). Respondents were specifically asked how long they believe that the retirement phase will last in a context of cloud-based ERP lifecycle. The answers from the respondents varies and with a gap from 3 months and up to two years, depending on which respondent answered. However, there is a consensus that this phase will become shorter than usual. Some of the reasons that the respondents believed it would be shorter is for reasons such as having lower switching barriers, growing out of a SaaS solution and the cost of switching in general would be much lower. Interestingly, four of the respondents mention that the phase will last only for several months and not even reaching a year. While the rest mentions up to 1-2 years period. However, the length of the retirement phase would vary depending on the company size, whereas larger companies naturally need more time than smaller counterparts, where the transition from a system to another could happen in a week. A profound comment from one of the respondents was “If a system vendor buys another system with the intention of liquidating the system and getting the customers over to their platform, then that’s how a system dies”. Last question asked in correlation with the ERP lifecycle was if the respondent believed that the ERP lifecycle is going to change or already has changed. Intriguingly enough, four of the eight respondents believe that a change to the lifecycle is going to happen while the remaining four respondents believe that changes to the lifecycle have already happened. A statement from one of the respondents is that “a cloudbased lifecycle is operative until the vendor decides to shut it down”. Implied from the respondent that the vendor is in control of the usage while on the contrary, an on-premise system could “live” longer in the retirement phase since it is physically installed software and could be used until the functionality gets too old, concluding with a longer phase. Other issue of concern expressed by the respondents was to continuously upgrade the system and keep in pace with the technological development and the switching barriers. The respondents believed that the lifecycle as a whole would be a longer time frame than what it has been before due to development and evolvement of the system. “The way of purchasing and using ERP system in a cloud-based context is totally different than what has existed before”, (ERP Cons 3). “I believe that the cloud-based systems can live longer and therefore the life expectancy will increase since it upgrades in another way than what traditional systems did”, (ERP Cons 1). Furthermore, another way that the lifecycle is changing according to the respondents is that the customers will become more in charge of changing necessary requirements when needed. Making it more customer-focused. As explained by one of the respondents, vendors traditionally let customers purchase systems with licenses and service agreements giving access to some support and some upgrades. While now, the lifecycle is changing since the customer is in charge and can leave the system whenever wanted and get their data and move on. 5. Conclusions and future research This research explored the question of “How will the retirement phase in the ERP lifecycle be affected by a cloud-based ERP” via conducting an in-depth case study on Xledger. While it is obvious that the ERP lifecycle framework by Esteves & Pastor is

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still relevant in a cloud-based ERP, however, it could be revisited and revised due to several changes to the lifecycle phases’ nature, such as, changed time frames to the phases. Our findings indicate a shorter retirement phase is achievable through an easier exit out of the system, and longer ERP lifecycles in general. Switching costs and vendor lock-in emerge as two salient barriers in the cloud-based ERP systems’ retirement. On the other hand, some of our informants believe that vendor lock-in will be really reduced in the future, which contradicts the current ERP literature. Our study implies at least for suggestions for future research. First, a replication of this study through a customer perspective can be adopted in order to elaborate on how organizations view the changes in the lifecycle and especially how their systems will retire. Second, what are the integration challenges between organizations’ legacy systems and cloud-based ERP. Third, how cloud ERP adoption barriers, as vendor lock-in can be reduced. And finally, as stated by one of our informants, it is most likely that academic researchers did not yet fully grasp the change of technology from on-premise to cloud-based ERP systems, thus more research is needed to evaluate the changes and impact of the cloud technology on the systems, lifecycles, and organizations in general. References

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